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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

RIVERSIDE 


RIVERSIDE 

PUBLIC  LIBRARY 

RIVERSIDE,  CALIFORNIA 

JAN  13  '120 


^INTERNATIONAL 
MONETARY    CONFERENCES 

THEIR 

PURPOSES,  CHARACTER,  AND  RESULTS 

WITH 

A  STUDY  OF  THE  CONDITIONS  OF  CURRENCY  AND  FINANCE 

IN   EUROPE  AND  AMERICA   DURING  INTERVENING 

PERIODS,  AND   IN   THEIR  RELATIONS   TO 

INTERNATIONAL  ACTION 


BT      -V 

HENRY   B.   RUSSELL 


NEW  YORK  AND  LONDON 
HARPER    &    BROTHERS    PUBLISHERS 

1898 


u 


Copyright,  1898,  by  HARPKII  k  BROTHERS. 


All  ri.jliti  rutrtld. 


PREFACE 


EXCEPTING  to  the  few  who  make  a  special  study  of  mone- 
tary science  and  affairs,  the  extensive  literature  pertaining 
thereto,  and  mainly  produced  within  half  a  century,  is  a  con- 
fusing jungle  of  conflicting  opinions,  isolated  facts,  dogmatic 
arguments,  and  diverse  conclusions.  While  economists  dis- 
cuss, governments  act ;  -and  thus  those  who,  by  the  exercise  of 
their  political  power,  largely  determine  the  conditions  of  a 
nation's  money,  lacking  the  time,  the  facilities,  or,  perhaps, 
the  ability  to  explore  the  jungle  for  themselves,  are  apt  to  be 
influenced  by  any  special  argument  that  falls  under  their  eye, 
or  by  some  plausible  plea  of  those  politically  artful  or  finan- 
cially selfish,  rather  than  by  an  understanding  of  their  own, 
based  upon  a  knowledge  of  the  practical  conditions  as  devel- 
oped by  antecedent  events.  Even  the  conclusions  of  able  and 
honest  disputants  have  been  frequently  vitiated  by  the  use 
made  of  events  out  of  their  chronological  order,  or  in  disre- 
gard of  their  historical  environment,  simply  for  the  sake  of  re- 
inforcing an  opinion  or  exalting  a  theory. 

This  book  has  been  written  in  the  belief  that  much  of  the 
confusion  and  difference  of  opinion  that  has  made  the  Silver 
Question  such  a  vexed  one  has  been  due  to  misapprehensions 
arising  from  the  study  of  particular  events  or  facts  without 
sufficient  regard  to  the  influences  which  produced  them.  By 
the  application  of  the  principle  of  evolution,  natural  science 
assumed  a  new  character.  It  is  equally  unsafe  in  any  social 


jv  PREFACE 

or  political  study  to  judge  of  a  fact  or  of  an  event  by  itself, 
severed  from  the  soil  which  nurtured  it,  or  removed  from  its 
original  atmosphere.  In  no  study  is  such  a  method  so  sure 
to  lead  to  inaccurate  conclusions  as  in  that  of  money,  which,  in 
its  very  nature,  is  obscurely  yet  firmly  rooted,  not  simply  in  the 
social  life  of  nations,  but  in  the  commercial  conditions  of  a 
whole  world. 

An  understanding  of  the  Silver  Question  cannot  be  had 
from  conditions  that  obtain  in  the  United  States  alone.  The 
effects,  for  example,  of  the  law  by  which  this  government  of- 
fered sixteen  pounds  of  silver  for  one  pound  of  gold  must  be 
studied  in  connection  with  another  fact,  that  France  was  at 
the  same  time  offering  a  pound  of  gold  for  only  fifteen  and  one- 
half  pounds  of  silver.  A  nation  has  its  own  coins,  but  com- 
merce makes  money  international.  Yet  the  tendency  has  been 
for  each  nation  to  discuss  the  question  of  coinage  from  its  own 
standpoint,  and  without  regard  to  the  natural  relations  of  its 
own  peculiar  circumstances  in  the  historic  and  international 
order  of  affairs. 

These  relations  are  extensively  disclosed  in  the  official  rec- 
ords of  international  monetary  conferences,  the  character  of 
which  has  affected  monetary  conditions  to  a  greater  degree 
than  has  been  generally  considered.  But  the  official  reports  of 
these  conferences  are  ill  adapted  to  the  needs  of  the  general 
reader,  and,  moreover,  arc  not  complete  statements;  equally 
unsatisfactory  are  other  documents  pertaining  to  the  confer- 
ences or  to  the  intervening  conditions  which  are  scattered 
through  government  reports  in  this  country  and  in  Europe. 
It  has  occurred  to  the  writer  that  the  principal  facts  in  relation 
to  these  events,  properly  arranged  and  concisely  stated,  might 
throw  a  stronger  light  on  the  questions  in  dispute,  reveal  the 
logic  of  events,  too  often  hidden  in  the  maze  of  theories  and 
political  debates,  and  enable  a  people,  whose  opinions  give 
character  to  legislation,  and  on  whose  judgment  largely  de- 


PREFACE  V 

pend  the  financial  strength  of  their  government  and  the  event- 
ual determination  of  a  monetary  system,  adequate  and  just  for 
the  whole  world,  to  better  understand  a  problem  which  seems 
destined  to  trouble  their  federal  politics. 

In.  drawing  information  from  a  multitude  of  sources,  the 
author  could  not  fail  to  appreciate  the  possibilities  of  uninten- 
tionally embracing  some  errors  of  fact;  but  he  believes  the 
general  principles  underlying  the  evolution  of  monetary  condi- 
tions are  unmistakable.  It  is  not  intended  to  advance  any 
theory  or  to  propose  any  scheme.  The  purpose  is  simply  to  tell 
the  story  of  the  conferences,  and  of  the  intervening  monetary 
events  of  importance,  as  affecting  conferences  or  as  affected 
by  them,  in  part,  the  story  of  the  evolution  of  the  Silver  Ques- 
tion in  this  country  and  in  Europe. 

HENEY  B.  KUSSELL. 
HARTFORD,  December,  1897. 


"There  is  a  vicious  circle:  states  fear  to  em- 
ploy silver  because  of  its  depreciation,  and  the 
depreciation  continues  because  states  refuse  to  em- 
ploy it.  — Right  Honorable  George  J.  Goschen,  British  Dele- 
gate at  the  Conference  of  1878. 


CONTENTS 


CHAPTER  I 

SLOW    DEVELOPMENT    OP    INTERNATIONAL    COINAGE    REGULATIONS  —  THE 

LATIN    UNION 

PAGE 

Crudities  of  ancient  coinage  and  commerce 1 

The  Renaissance 6 

Early  regulations  and  treaties 7 

Financial  development  in  America 9 

Progress  of  the  Decimal  System          .......  17 

Napoleon  III.  and  his  economic  campaign 23 

Formation  of  the  Latin  Union 26 

Beginning  of  the  fall  of  silver 32 

CHAPTER  II 

GENERAL  ACCEPTANCE  OF  THE  PRINCIPLE  OF  THE  GOLD  STANDARD  — 
CONFERENCE  OF  1867 

Napoleon's  programme  for  international  coinage        ....  34 

His  overtures  to  the  United  States      .......  38 

An  international  committee  and  its  conclusions 46 

Opening  proceedings  of  the  conference       ......  47 

The  question  of  the  standard 63 

Appearance  of  Jerome  Napoleon 72 

England's  declaration 73 

Results  of  the  conference 81 

CHAPTER  III 

CHANGES  IN  COINAGE  LAWS  AND  MINT  REGULATIONS  —  THE  DEMONETIZA- 
TION  OF   SILVER 

Agitation  for  international  uniformity  in  coinage       ....  87 

Situation  in  the  United  States 91 

The  English  Parliamentary  Commission 101 

Effects  of  the  Franco-Prussian  war 103 

Revision  of  mint  laws  in  the  United  States  109 


viii  CONTENTS 

PAGE 

German  unity  and  coinage  reform 115 

Dropping  the  silver  dollar  in  Congress 118 

Monetary  changes  in  Sweden  and  Holland 123 

Germany's  imperial  coinage .  126 

CHAPTER  IV 

CONTINUED  LIMITATION  OF  SILVER  COINAGE  —  AWAKENING  IN  THE  UNITED 

STATES 

Changes  in  the  conditions  of  gold  and  silver 129 

Effect  of  changes  on  European  governments 137 

Holland  seeks  aif  international  conference 141 

Anxiety  in  England 147 

Discovery  of  silver  demonetization  in  United  States           .         .        .  151 

The  Silver  Commission  of  1876 161 

The  Silver  Question  in  politics 168 

Refunding  and  resumption 170 

The  Bland  Bill  in  Congress 178 

The  Allison  amendment  and  a  conference 186 

Conditions  in  the  European  markets 192 

The  silver  act  a  blow  to  bimetallism 197 

CHAPTER  V 

FIRST  EFFORTS  TO  SECURE    INTERNATIONAL    BIMETALLISM  —  THE  CONFER- 
ENCE OF  1878 

Invitations  to  a  conference  .........  202 

Its  meeting  at  Paris 204 

The  American  propositions  .........  209 

Position  of  European  governments 212 

Germany's  responsibility  for  the  situation 231 

The  action  of  the  Latin  Union 233 

Appeals  of  the  American  delegates 235 

The  European  response        .........  244 

Declaration  of  the  delegates  of  the  United  States       ....  247 

CHAPTER  VI 

SERIOUS    LOSS    OF    GOLD    BY    EUROPEAN    BANKS    OF  ISSUE  —  THE    CONFER- 
ENCE OK  1881 

Low  reserve  in  the  Bank  of  England  ...                 ...  251 

Austrian  mints  closed  to  silver 253 

Germany  suspends  sales  of  silver         .......  256 

France  and  the  United  States  arrange  for  a  conference       .         .        .  269 

The  German  declaration  and  its  alleged  concessions    ....  274 

The  long  debate 278 


CONTENTS  ix 

PAGE 

Position  of  the  United  States  as  to  bimetallism 292 

The  adroit  hand  of  England         . 302 

Intermission  of  six  weeks 306 

Plan  of  Moritz  Levy  of  Denmark        ........  308 

Offer  of  the  Bank  of  England  to  hold  silver  in  its  reserve .        .        .  317 

Prorogation  of  the  conference 321 

CHAPTER  VII 

SILVER   COINAGE   IN   THE   UNITED    STATES   AND   PROTECTIVE  MEASURES   IN 
EUROPE  —  TIIE   STRUGGLE   FOR  GOLD 

Holland  provides  for  sale  of  silver 326 

Working  of  the  Bland-Allison  Act 327 

Conditions  in  England  and  India 330 

"  Central  European  Zollverein  " 333 

Mission  of  Mantou  Marble  to  Europe 338 

An  appeal  from  India  for  an  agreement 341 

Mission  of  Edward  Atkinson  to  Europe 846 

Report  of  the  English  Gold  and  Silver  Commission    ....  350 

Beginning  of  the  gold  export  movement  from  the  United  States       .  354 

Secretary  Windom's  plan  for  silver  purchases 364 

The  Baring  crisis 367 

Negotiations  for  another  conference 370 

CHAPTER  VIII 

PROPOSED  PLANS  FOR  A    LARGER  USE    OF    SILVER  —  THE  CONFERENCE  OF 

1892 

The  conference  assembles  at  Brussels *               .  376 

Propositions  of  the  United  States 378 

Statements  of  various  governments 382 

The  Rothschild  plan  and  its  meaning 384 

A  secret  committee  for  examining  plans 388 

The  Levy  plan 394 

General  discussion  of  bimetallism 400 

Prorogation  of  the  conference 405 

CHAPTER  IX 

THE  COURSE  OF  MONETARY  EVENTS    SINCE    1892 — THE  PRESENT  AND  THE 

FUTURE 

Political  conditions  in  the  United  States     ......  409 

The  Indian  Currency  Commission  and  its  report         .        .        .        .412 

Closing  of  the  Indian  mints 417 

Reasons  for  gold  exports  from  the  United  States        ....  423 


x  CONTENTS 

PAGE 

Repeal  of  the  silver-purchase  act 426 

Passage  of  the  Mirbach  resolution  in  the  Reichstag    ....  431 

House  of  Commons  votes  unanimously  for  a  conference    .        .        .  434 

The  position  of  France 435 

"  Silver  craze  of  1895  "  in  the  United  States 438 

The  election  of  1896 442 

Monetary  changes  in  Russia  and  Japan 445 

The  conditions  in  Mexico 449 

The  plight  of  India 451 

The  Wolcott  Commission 459 

Increased  gold  production  and  the  decline  of  silver    ....  463 

Possibilities  of  the  future 464 

INDEX 469 


INTERNATIONAL 
MONETARY  CONFERENCES 


CHAPTER  I 

SLOW  DEVELOPMENT  OP  INTERNATIONAL  COINAGE  REGULATIONS.  -  THE 

LATIN  UNION 

FROM  the  early  period  in  the  world's  history  when  the 
precious  metals  came  into  use  as  money  until  near  the  middle 
of  the  present  century  the  adoption  of  international  regula- 
tions for  their  coinage,  circulation,  or  relative  value  did  not 
naturally  suggest  itself.  With  only  cumbrous  and  slow 
means  of  communication,  crude  methods  of  coinage,  or  none 
at  all,  a  commerce  greatly  restricted  and  principally  by  barter, 
ancient  states  possessed  little  understanding  of  the  relation  of 
their  own  economic  affairs  to  those  of  their  neighbors.  The 
principles  underlying  commercial  exchanges  had  little  op- 
portunity to  manifest  themselves  when  tribal  or  national  pros- 
perity was  commonly  reckoned  by  the  success  with  which  am- 
bitious or  jealous  rulers  acquired  by  conquest  the  rich  lands 
and  numerous  herds  of  more  thrifty  but  less  warlike  peoples, 
either  to  remain  as  conquerors,  or,  returning  to  their  original 
domains  with  the  more  desirable  plunder,  to  exact  revenue  in 
the  most  convenient  and  portable  form,  till  they  were  in  turn 
overcome  by  some  similar  process.  Lands  and  herds  were  the 
main  evidences  of  wealth,  cattle  the  commonest  standard  of 
value.  So  far  as  there  was  any  coinage,  it  was  held  as  the  pre- 
rogative of  the  ruler,  and  was  mainly  confined,  till  recent 
times,  to  the  baser  metals.  There  was  little  or  no  thought  of 


2  THE  LATIN  UNION 

the  exchangeable  value  of  coins  outside  the  king's  domain; 
for  even  the  more  civilized  ancients,  though  refined  artists  and 
profound  reasoners  did  not  acquire  the  power  of  careful  eco- 
nomic observation,  and,  currency  being  rare,  few  of  the  general 
laws  governing  it  were  discovered  till  after  the  gold  and  silver 
stores  of  American  aborigines  were  poured  into  Europe. 

Very  little  gold  was  coined  in  Athens  or  Greece  proper 
before  the  time  of  Alexander  the  Great.  The  amount  of 
money  now  in  existence  is  incomparably  greater  than  either  in 
classic  or  mediaeval  times.  Mines  were  then  few,  and  most  of 
the  existing  treasure  was  locked  up  in  the  vaults  of  kings  or 
hoarded  by  private  persons.  During  the  time  of  the  consuls 
the  leading  Roman  families  manufactured  their  own  coins  as 
they  saw  fit;  but  when  the  greater  part  of  the  then  known 
world  was  brought  under  the  imperial  sway  of  Augustus,  his 
vigorous  arm  suppressed  these  private  operations  and  estab- 
lished a  coinage  bearing  the  image  and  superscription  of  Caesar 
through  the  wide  extent  of  an  empire  of  120,000,000  souls.  A 
great  increase  in  the  use  of  coins  followed,  and  there  was  a 
marked  tendency  towards  uniformity,  tributary  states  seeking 
to  coin  their  metal  in  accordance  with  the  Roman  standard. 
But  the  mines  were  not  worked,  and  the  mass  of  the  precious 
metals  dwindled  away  to  such  an  extent  that  the  scarcity  of 
money  became  a  serious  cause  of  weakness  to  the  imperial 
structure.  When  the  empire  broke  up,  some  of  the  conquerors 
still  maintained  the  Roman  monetary  system;  but,  little,  by 
little,  petty  chieftains,  seizing  the  political  debris,  built  up 
small  states,  lay  and  ecclesiastical,  each  of  them  claiming  the 
sovereign  power  of  coining  money.  Soon  licenses  to  coin 
were  granted  to  nobles  and  bishops.  This  was  pre-eminently 
the  case  in  Germany.  In  910  we  find  Otho  II.,  of  the  then 
dominant  Saxon  line,  granting  such  licenses  to  the  archbishop 
of  Strasburg  and  to  lesser  bishops.  Similar  privileges  were 
granted  under  the  heptarchy  in  England,  and  the  practice 


COINAGE  OF  NOBLES  AND  BISHOPS  3 

quickly  became  general.  Naturally,  such  political  and  eccles- 
iastical conditions  soon  brought  about  the  greatest  dissimilarity 
in  coins,  which  were  chiefly  of  silver  and  copper,  and  could  be 
struck  only  to  a  limited  extent;  indeed,  from  the  fall  of  the 
Roman  empire  till  nearly  the  eleventh  century,  gold  and  silver 
were  rarer  than  they  have  ever  been  in  historic  times.  Those 
who  could  secure  the  precious  metals  were  tempted  by  their 
ever-increasing  value  and  the  disturbed  condition  of  the  times 
either  to  preserve  them  in  safer  and  more  ornamental  shape  or 
to  adopt  the  villianous  practice  of  debasing  the  coinage.  It  has 
been  estimated  that  in  the  days  of  Charles  the  Great  the  stock 
of  gold  and  silver  in  Europe,  outside  of  Constantinople,  was 
not  greater  than  thirty-six  millions  sterling.' 

There  was  little  uniformity  in  the  estimates  of  the  relative 
value  of  the  two  metals.  In  Florence  the  coining  ratio  was 
10|  and  11  to  1;  in  Germany,  all  the  way  from  8  to  12  to  1; 
in  Flanders,  13.22  to  1 ;  in  England,  13.5  to  1.  The  ratio  dif- 
fered even  within  a  single  state  at  the  same  time.  Anything 
like  exact  uniformity  in  coins  of  the  same  nominal  value  was 
necessarily  rare  in  countries  where  the  rulers,  nobles,  and 
bishops,  all  coining  for  themselves,  did  not  scruple  to  reduce 
the  amount  of  precious  metal  in  their  pieces  for  their  own 
profit,  and  when  the  best  process  of  coinage  known  consisted 
in  placing  the  metal  between  steel  dies  and  striking  with  a 
hammer.  It  was  not  until  late  in  the  sixteenth  century  that 
Antoine  Brucher  invented  a  mill,  and  it  was  considerably  later 
when  the  old  methods  were  superseded. 

An  advance  upon  these  crude  methods  naturally  resulted 
from  a  combination  of  influences  beginning  with  the  Crusades, 
one  of  the  important  economic  effects  of  which  was  the  stimula- 
tion given  to  commerce  with  the  East.  Although  this  growing 
trade  was  carried  on  largely  by  monopolies,  it  led  to  a  greater 
diffusion  of  wealth  and  a  wider  distribution  of  the  precious 
metals.  xVnother  notable  stimulus  was  given  to  commercial 


4  THE  LATIN  UNION 

transactions  when  the  persecuted  Jews  introduced  drafts 
or  orders.  "  They  invented,"  says  Montesquieu,  "  bills  of  ex- 
change, -and  by  these  means  commerce  was  enabled  to  elude 
violence  and  maintain  itself,  the  merchants  having  only  in- 
visible wealth  which  could  be  sent  anywhere,  and  left  no  trace 
of  its  passage."  These  expedients  were  less  the  invention  of 
mediaeval  Jews  than  their  inheritance.  Similar  methods 
probably  prevailed  to  some  extent  even  in  Babylonian 
days  and  in  the  times  of  Jewish  national  prosperity. 
The  scattered  people  carried  their  traditional  familiarity 
with  money  changing  into  mediaeval  Europe,  and  by  their 
genius  for  finance,  and  because  of  the  simplicity  of  the  masses 
in  commercial  matters  and  of  the  improvidence  of  kings  and 
nobles,  they  came  to  acquire  nearly  all  the  ready  money  by 
the  eleventh  century.  Odious  to  the  rulers,  they  were  no  less 
necessary.  When  placed  under  the  sentence  of  perpetual  ex- 
communication, they  could  be  robbed,  tormented,  and  driven 
out  with  impunity,  but  they  were  equal  to  the  emergency.  In 
exile,  they  deposited  their  precious  metals  in  safe  hands,  and 
continued  their  trade  by  giving  travelers  secret  letters  or  bills 
of  exchange  to  those  intrusted  with  their  wealth. 

Thus  commerce  spread  rapidly.  The  Germans  came  to 
have  a  counting-house  on  the  Rialto,  and  commercial  leagues 
or  trades  unions  were  formed  in  the  growing  German  cities, 
where  commerce  received  another  great  impetus.  The  Ilan- 
seatic  League  became  one  of  the  most  powerful  commercial  or- 
ganizations ever  known  to  history,  including,  besides  the  cities 
which  composed  it,  forty-four  confederate  and  twenty  allied 
cities  in  France,  England,  Elanders,  Spain,  and  Italy,  without 
counting  the  subject  towns.  It  had  four  great  branches  —  at 
Bergen  in  Norway,  Novgorod  in  Russia,  Bruges  in  Belgium, 
and  at  London.  Established  in  1219,  primarily  by  German 
cities  for  the  protection  of  their  trade,  which  was  exposed  to 
both  the  rapacity  of  rulers  and  the  attacks  of  pirates,  it  devcl- 


MEDIAEVAL  TRADE  AND  COINS 


oped  into  an  association  for  the  consideration  and  promotion  of 
all  means  for  the  protection  and  advancement  of  its  trade. 
With  the  discovery  of  America  and  new  waterways  in  the 
fifteenth  century  the  league  began  to  decline,  and  at  the  last 
diet,  held  at  Lubeck  in  1630,  the  majority  of  the  cities  re- 
nounced their  alliance.  But  while  so  extensive  a  commerce, 
so  long  under  the  control  of  organizations  of  such  great 
power,  unquestionably  developed  the  methods  of  exchange, 
only  scant  consideration  was  given  to  questions  of  coinage. 
Commerce  was  still  largely  barter,  and  the  precious  metals 
played  a  subordinate  part  in  determining  values.1  When  ex- 
changed, it  was  usually  by  weight,  while  taxes,  rents,  and 
feudal  dues  were  paid  in  produce.  The  breaking-up  of  the 
trade  leagues  was,  in  no  small  degree,  due  to  the.  increased 
use  of  the  precious  metals,  the  greater  safety  of  commerce 

i  How  inconsiderable  was  the  coinage  in  England  before  the 
present  century  may  be  shown  by  the  following  statement  of  the 
amount  for  each  principal  reign  from  the  time  of  Henry  III.: 


1216-1272  Henry  III. 
1272-1307  Edward  I. 
1307-1327  Edward  II. 
1327-1377  Edward  III. 
1377-1399  Richard  II. 
1399-1413  Henry  IV. 
1413-1422  Henry  V. 
1422-1461  Henry  VI. 
1461-1483  Edward  IV. 
1485-1509  Henry  VII. 
1509-1547  Henry  VIII. 
1558-1603  Elizabeth 
1603-1625  James  I. 
1625-1649  Charles  I. 
1649-1660  Cromwell 
1660-1685  Charles  II. 
1685-1689  James  II. 
1689-1702  William  and  Mary 
1702-1714  Anne 
1714-1727  George  I. 
1727-1760  George  II. 
1760-1820  George  III. 
1820-1830  George  IV. 
1830-1837  William  IV. 
1837-(1892)  Victoria 


Silver. 

Gold. 

Total. 

£3,898 

£3,898 

38,603 

38,603 

46,756 

46,756 

85,701 

£11,340 

97,041 

2,228 

3,988 

6,216 

314 

396 

710 

6,924 

19,746 

26,670 

404,677 

38,317 

442,994 

89,704 

230,760 

320,464 

138,280 

189,232 

327,512 

355,403 

292,916 

648,319 

6,359,583 

795,138 

7,154,721 

1,641,005 

3,666,390 

5,307,395 

8,776,544 

3,319,677 

12,096,221 

1,000,000 

154,512 

1,154,512 

3,722,180 

4,177,254 

7,899,434 

518,316 

2,113,639 

2,631,955 

7,093,074 

3,418,889 

10,511,963 

207,095 

2,484,531 

2,291,626 

233,045 

8,492,876 

8,725,921 

304,360 

11,662,216 

11,966,576 

6,827,818 

75,447,489 

82,275,307 

2,216,163 

36,147,701 

38,363,864 

1,111,298 

11,435,334 

12,546,632 

46,265,269 

393,903,734 

440,169,003 

6  THE  LATIN  UNION 

following  the  discovery  of  America,  and  the  larger  use  of  bills 
of  exchange. 

The  first  English  gold  coin  was  not  struck  till  the  reign  of 
Henry  III.,  in  the  latter  part  of  the  thirteenth  century.  No 
regular  gold  currency  was  introduced  till  a  century  later,  under 
Edward  III.,  and  the  pound  sterling  was  not  minted  till  1489, 
by  Henry  VII.  The  first  German  gold  coins  are  said  to  have 
been  struck  by  Archbishop  Walram,  of  Cologne,  about  1340. 
Russian  coinage  began  late  in  the  fifteenth  century.  Even 
where  coinage  flourished  it  manifested  the  greatest  variety, 
was  generally  unfit  for  a  standard  of  value,  and  was  seldom 
used  as  such.  France  during  all  these  centuries  was  annoyed 
by  the  diverse  coinages  of  feudal  sovereigns  and  ecclesiastics  of 
high  and  low  degree,  and  many  specimens  of  the  coinage  of  sec- 
ondary dukedoms  and  minor  principalities  of  the  various  na- 
tions of  Europe  are  still  extant. 

The  situation  greatly  changed  when  Spain  brought  gold 
and  silver  from  America.  Up  to  that  time  the  greatest  wealth 
consisted  in  land;  but  beginning  with  the  sixteenth  cen- 
tury the  Spaniards  annually  threw  into  circulation  a  large 
quantity  of  both  gold  and  silver,  while  at  the  same  time  valu- 
able merchandise  came  in  increasing  quantities  from  Asia. 
Europe  had  more  money  and  more  merchandise,  an  exceed- 
ingly fortunate  circumstance,  for  without  the  money  the  value 
of  the  merchandise  would  have  fallen,  wiping  out  a  large 
amount  of  wealth  and  injuring  commerce. 

Finding  purchasers  for  the  merchandise,  trade  increased, 
money  began  to  be  more  widely  distributed,  movable  fortunes 
were  accumulated,  the  bourgeoisie  developed  strength  and  im- 
portance, princes  began  to  study  economic  questions,  nations 
established  closer  relations,  and  knowledge  advanced.  Europe 
was  born  again;  it  was  the  renaissance.  The  art  of  printing 
was  discovered,  the  calendar  was  reformed.  The  thirst  for 
knowledge  and  the  admiration  of  art  seized  princes,  popes, 


THE  RENAISSANCE  7 

knights,  monks,  and  burgers.  Even  in  Germany,  troubled 
with  religious  dissensions,  the  poet  and  scholar  Ulrich  von 
Hutten  exclaimed  with  reference  to  the  intellectual  awaken- 
ing, "  How  good  it  is  to  live !  "  Civilization  had  waited  long, 
but  when  the  change  came  it  brought  with  it  such  names  in 
literature  as  Tasso,  Ariosto,  Montaigne,  Rabelais,  Cervantes, 
and  Shakespeare;  in  art,  Michael  Angelo,  Titian,  and  Raphael; 
in  science,  Copernicus  and  Tycho  Brahe;  in  politics,  Machia- 
velli;  in  theology,  Martin  Luther.  We  are  not  apt  to  exag- 
gerate the  part  that  American  gold  and  silver  had  in  the  con- 
struction of  the  notable  examples  of  architecture  of  that  cen- 
tury. 

It  is  not  strange  that  the  incongruous  condition  of  the  coin- 
age attracted  attention  in  such  times,  and  that  many  practical 
remedies  were  applied  within  the  different  states.  Nor  is  it 
strange,  in  view  of  the  early  commercial  development  of  the 
German  cities  and  the  remarkable  variety  of  their  coins,  that 
the  first  really  important  efforts  for  international,  or  otherwise 
mutual,  coinage  agreements  took  place  among  the  Germans. 
Members  of  one  race,  though  preserving  many  independent 
political  organizations,  they  had  evident  incentives  to  consult 
their  mutual  interests  regarding  their  chaotic  coinage.  As 
early  as  1354,  the  three  ecclesiastical  electors,  Mayence, 
Treves,  and  Cologne,  had  entered  into  a  coinage  agreement  for 
"  coining  a  common  money  of  gold  and  silver  in  all  our  lands," 
but  the  arrangement  appears  to  have  been  futile.  With  the 
increase  in  metallic  circulation  in  the  fifteenth  century,  the 
four  electors  of  the  Rhine  formed  a  coinage  union,  agreeing 
as  to  the  denomination  of  the  coins  to  be  struck  and  as  to  means 
for  the  protection  of  the  coinage  prerogative.  In  spite  of  re- 
ligious wars  and  other  obstacles,  various  agreements  were  made 
from  time  to  time  between  the  petty  German  powers  regarding 
the  reciprocal  acceptance  of  coins.  Such  agreements  were  also 
made  at  Zinna  in  1667,  and  at  Leipzig  in  1690,  between  the 


g  THE  LATIN  UNION 

electors  of  Saxony  and  Brandenburg  and  the  House  of  Bruns- 
\vick-Liineburg;  at  Vienna,  in  1765,  between  Austria  and  the 
elector  of  Bavaria;  and  at  Worms,  in  1766,  between  the  elect- 
ors of  Mainz,  Treves,  and  the  Palatinate  Landgrave  of  Hesse- 
Darmstadt  and  the"  free  city  of  Frankfort.  Provisions  for  the 
mutual  acceptance  of  coins  are  found  in  the  early  treaties  es- 
tablishing the  German  customs-union,  and  gradually  the  coin- 
age regulations  of  all  the  members  of  the  union  were  reduced 
to  a  practical  system  of  exchangeability  on  a  uniform  basis, 
but  all  sorts  of  coins  remained  in  use. 

Similar  steps  were  being  taken  in  other  portions  of  Europe 
for  the  harmonizing  of  the  coinages  of  different  provinces,  and 
for  unifying  the  coinage  prerogative.  In  the  time  of  Louis  IX. 
there  were  in  France  over  eighty  barons  and  bishops  holding 
this  prerogative  by  grant  of  the  king.  An  agitation  for  depriv- 
ing them  of  the  right  was  started  under  Louis  X.,  but  it  re- 
sulted only  in  the  publication  of  an  official  list  of  those  entitled 
to  the  right,  though  stricter  provisions  as  to  the  number  to  be 
stamped  from  the  mint  unit  of  weight  and  as  to  the  imprint 
were  enforced.  Gradually,  under  the  succeeding  kings,  the 
crown  purchased  the  coinage  right  from  those  to  whom  it  had 
previously  given  it,  and  by  the  end  of  the  fifteenth  century,  or 
when  gold  began  to  come  from  America,  the  unity  of  the 
coinage  prerogative  was  wellnigh  reached  in  France.  In  Eng- 
land after  the  Magna  Charta,  the  influence  of  Parliament 
was  directed  towards  such  unity. 

But  up  to  the  present  century  there  was  nothing  like  an 
agreement  between  distinctly  different  nations  attempted. 
Each  great  state  regarded  its  coinage  as  entirely  its  own  busi- 
ness, to  be  regulated  as  it  saw  fit  and  irrespective  of  the  legal 
ratios  fixed  elsewhere,  except  upon  occasions  when  animated 
by  a  desire  to  get  the  better  of  some  neighboring  state.  With 
the  beginning  of  the  nineteenth  century  the  coinage  systems  of 
Europe  began  to  assume  more  clearly  defined  forms.  Eng- 


EFFORTS  FOR  MONETARY  REFORM  9 

land,  after  overrating  gold  in  her  coinage  all  through  the 
eighteenth  century,  was  forced  by  the  Napoleonic  wars  to  a 
currency  of  inconvertible  paper,  but  in  1816  established  her 
present  gold  standard.  When  the  provinces  of  the  Nether- 
lands and  Belgium  were  united  under  a  single  sceptre,  both 
countries  had  a  variety  of  coins,  for  every  province  had  claimed 
the  right  of  coming  money;  but  a  law  was  passed  under  Will- 
iam L,  establishing  the  florin  as  a  unit.  In  1838  the  German 
customs-union  formed  a  coinage  union  at  Dresden;  in  1845,  at 
Karlsruhe,  the  Prussian  customs-union  took  a  similar  step;  and 
in  1857  both  unions  united  in  a  treaty  which  remained  prac- 
tically binding  on  all  the  German  states  till  the  formation 
of  the  empire  in  1870,  although  Austria,  which  was  a  party  to 
this  so-called  monetary  union,  withdrew  in  1867  as  a  result 
of  the  war  with  Prussia  over  Ilolstein.  This  treaty  extended 
the  regulations  fixed  by  previous  agreements,  and  fixed  for 
the  purposes  of  the  Zollverein  the  relative  values  of  the  gold 
crown,  the  silver  thaler,  and  the  silver  florin.  The  issue  of 
"  vereinsthalers,"  to  have  currency  throughout  the  contract- 
ing states,  was  also  provided  for.  But  none  of  these  arrange- 
ments could  really  be  called  international.  They  were  agree- 
ments between  states  then  within  the  nation. 

The  germ  of  real  international  action  as  to  coinage  was 
first  developed  in  America,  not  by  considerations  for  the  coin- 
age strictly,  but  by  the  scientific  movement  about  the  middle 
of  this  century  for  uniform  weights  and  measures  and  for  the 
extension  of  the  decimal  system.  It  was  a  phase  of  another 
notable  scientific  awakening,  when  new  economic  laws  were 
laid  down  by  Gournay,  the  Frenchman,  and  Adam  Smith,  the 
Scotchman.  The  modern  decimal  system  of  weights  and 
measures  originated  in  France  in  1790,  and  nine  years  later 
the  prototype  meter  of  platinum  was  constructed  by  an  inter- 
national commission  representing  the  governments  of  France, 
Holland,  Denmark,  Sweden,  Switzerland,  Spain,  Savoy,  and 


10  THE  LATIN  UNION 

the  Roman  Cisalpine  and  Ligurian  republics.  While  the  prog- 
ress of  the  system  was  slow  outside  of  France,  its  advantages 
suggested  themselves  to  scientific  men  and  leading  statesmen, 
and  to  none  more  than  to  those  Americans  influential  in  the 
early  constitutional  history  of  the  United  States.  In  no  coun- 
try, perhaps,  were  the  conditions  so  favorable  for  the  intro- 
duction of  new  ideas,  for  the  government  was  new  and  the 
people  less  affected  by  long-standing  traditions.  Nowhere 
could  plans  of  uniformity  appeal  so  strongly  to  the  people  as 
in  the  new  republic,  where  great  lack  of  uniformity  prevailed, 
to  some  extent  in  weights  and  measures,  but  more  especially  in 
coins. 

Originally  and  for  a  long  period  the  American  people  used 
the  English  monetary  terms  most  extensively,  but  the  ideas  an- 
nexed to  the  pound,  shilling,  and  penny  were  almost  as  vari- 
ous as  the  states  themselves.    Several  attempts  were  made  by 
the  Continental  Congress  to  harmonize  the  different  coins  cur- 
rent, and  in  1778  a  committee  was  appointed  to  consider  the 
state  of  the  money  and  finances  of  the  country,  "  and  report 
thereon  from  time  to  time."     In  1782  Robert  Morris,  superin- 
tendent of  finance,  believing  it  necessary  for  the  country  to 
have  a  standard  of  its  own  by  which  to  estimate  the  various 
coins  current,  recommended  the  adoption  of  an  American  coin, 
and,  in  view  of  its  scientific  advantages,  a  decimal  system  of 
numeration.     At  the  same  time  Jefferson  added  some  notes 
favoring  the  application  of  the  decimal  system  not  only  to 
money    but  to  weights  and  measures.     He  advised  that  the 
silver  dollar  should  be  made  the  unit  of  value  —  dollars  were 
already  called  for  in  the  requisitions  of  Congress  —  while  Mor 
ris  proposed  a  unit  of  a  quarter  of  a  grain  of  pure  silver. 
Jefferson's  decimal  plan,  elaborated  by  the  genius  of  Hamilton, 
was  adopted  by  Congress  in  1792,  the  law  decimally  subdivid- 
ing the  dollar  thus  antedating  a  little  the  establishment  of  the 
metric  system  in  France.     But  it  was  many  years  before  the 


BEGINNING  OP  AMERICAN  COINAGE  11 

people  of  some  sections  of  the  country  could  be  persuaded  to 
replace  their  familiar  reckoning  in  pounds,  shillings,  and 
pence  by  that  of  dollars  and  cents;  and  it  was  practically  a 
generation  and  a  half  before  a  national  coin  came  into  any- 
thing like  general  use.  For  a  half -century  the  currency  con- 
sisted almost  entirely  of  foreign  coins  and  bank-notes,  the 
former  forcing  out  national  silver  coins,  so  that  in  1806  the 
coinage  of  dollars  was  stopped,  and  the  latter  tending  much  of 
the  time  to  force  out  all  but  inferior  foreign  coins.  Our  great- 
grandfathers were  not  so  sentimental  over  the  .silver  dollar  as 
some  of  us  have  become  in  the  last  quarter  of  a  century. 
Thomas  Jefferson  dealt  it  the  first  blow  when  as  President  he 
caused  the  following  notice  to  be  sent  to  the  Director  of  the 

Mint: 

"  Department  of  State, 

"May  1,  1806. 

"  Sir:— In  consequence  of  a  representation  from  the  Directors  of 
the  Bank  of  the  United  States  that  considerable  purchases  have  been 
made  of  dollars  coined  at  the  mint  for  the  purposes  of  exporting 
them,  and  as  it  is  probable  further  purchases  will  be  made,  the 
President  directs  that  all  silver  to  be  coined  at  the  mint  shall  be 
of  small  denominations,  so  that  the  value  of  the  largest  pieces  shall 
not  exceed  half  a  dollar.  JAMES  MADISON." 

Except  a  thousand  pieces  coined  just  thirty  years  after  this 
order,  no  more  silver  dollars  were  coined  till  after  Andrew 
Jackson  retired  from  the  Presidency.  For  nearly  half  a  cen- 
tury Congress  devoted  its  consideration  of  the  currency  mainly 
to  plans  for  fixing  the  exchangeable  value  of  foreign  coins,  and 
to  proposals  for  changing  the  ratio  between  gold  and  silver  to 
keep  either  the  one  or  the  other  in  circulation. 

Under  such  conditions,  the  government  being  unable  to 
keep  in  circulation  any  coinage  of  its  own,  and  the  old  stock- 
ings of  the  people  being  full  of  old  coins  bearing  the  stamp 
of  many  foreign  mints,  with  all  sorts  of  names  and  with  dif- 
ferent values  in  different  places,  the  advantages  of  securing 
an  international  uniformity  in  coinage  could  not  fail  to  attract 
the  attention  of  the  brighter  minds.  France  had,  meanwhile, 


12  THE  LATIN  UNION 

issued  invitations  to  the  various  powers  to  co-operate  in  the 
construction  and  establishment  of  the  metrical  system  of 
weights  and  measures,  and,  in  obedience  to  a  resolution  of  the 
United  States  Senate,  passed  in  1817,  the  Secretary  of  State, 
John  Quincy  Adams,  made  a  report  strongly  and  brilliantly 
advocating  an  international  conference.  While  urging  such 
a  conference,  especially  with  Great  Britain,  Trance,  and 
Spain,  which  also  had  the  subject  under  consideration,  with  the 
main  view  to  securing  uniformity  in  weights  and  measures,  he 
added  a  note  on  the  proportional  value  of  the  pound  sterling 
and  the  dollar,  clearly  showing  that  he  appreciated  the  desira- 
bility of  a  plan  approximating  the  exchange  values  of  coun- 
tries with  which  we  were  most  extensively  engaged  in  com- 
merce. 

The  conventional  proportion  between  the  pound  sterling 
and  the  dollar,  used  in  commercial  intercourse  and  sanctioned 
by  Congress,  had  settled  the  par  of  exchange  at  one  pound  ster- 
ling for  $4.44  in  the  United  States,  while  in  Great  Britain  it 
was  at  four  shillings  and  sixpence  for  the  dollar.  "  The  results 
of  the  two  estimates  are  not  the  same,"  wrote  Adams;  "  if  the 
dollar  is  worth  four  shillings  and  sixpence,  the  pound  sterling 
is  worth  four  dollars  and  forty-four  cents  and  four  mills,  and 
an  endless  fraction  of  four  decimal  parts.  If  the  pound 
sterling  is  worth  $4.44,  four  shillings  and  sixpence,  or  fifty- 
four  pence,  are  equal  only  to  ninety-nine  cents  and  nine  mills. 
The  difference  is  one  mill  in  a  dollar,  or  one  thousand  dollars 
in  a  million." 

Besides  this,  gold  and  silver  coins,  even  if  in  practice 
scarce,  were  in  principle  legal  tender  for  any  amount,  but  in 
England  silver  was  only  legal  tender  in  payments  not  exceed- 
ing forty  shillings;  and  by  restriction  of  cash  payments  by  the 
bank,  the  only  material  in  which  an  American  merchant 
having  a  debt  due  him  in  England  could  obtain  payment  was 


INCONGRUITIES  IN  EXCHANGE  18 

paper  of  the  Bank  of  England,  while  the  English  merchant 
could  obtain  on  this  side  either  gold  or  silver. 

Besides  the  incongruities  pointed  out  by  Adams  there  were 
many  indications  of  an  unhealthy  condition  of  the  currency. 
All  the  mint  could  do  was  to  stamp  bullion  into  convenient 
form  for  exportation.  The  spectacle  must  have  been  hu- 
miliating to  the  sagacious  financiers  and  earnest  patriots  of 
those  days,  but  the  "  people  "  thought  little  or  nothing  about 
it.  Even  so  stanch  a  believer  in  Democracy,  a  man  so  de- 
liberately plain  as  Jefferson,  said,  when  speaking  of  the  money 
question,  "  The  bulk  of  mankind  are  schoolboys  through  life." 
As  a  people,  the  Americans  were  proud  of  their  independence 
and  held  it  dear.  Running  their  own  government  and  by 
energy  and  thrift  making  progress  in  their  resourceful  do- 
main, they  were  not  inclined  to  ask  odds  of  any  foreigner  re- 
garding forms  of  money.  They  had  recently  "  whipped  "  Eng- 
land a  second  time  on  both  land  and  sea.  They  felt,  and  un- 
doubtedly were,  entirely  competent  to  do  it  again  on  American 
shores;  so  they  viewed  with  little  concern  a  thing  so  insidious 
and  impalpable  as  the  loss  of  national  specie,  which  they  rarely 
had  seen.  They  had  bank-notes  from  their  own  bank,  and 
were  disturbed,  if  at  all,  when  the  bank  appeared  to  enjoy  too 
great  a  monopoly.  If  the  average  member  of  Congress  had 
called  his  constituents  together  and  asked  of  them  their  opinion 
as  to  a  monetary  convention  with  Great  Britain,  they  would 
very  likely  have  declared  such  a  step  entirely  unnecessary,  on 
the  ground  that  the  United  States  could  take  care  of  them- 
selves and  the  British  might  attend  to  their  own  affairs.  Eco- 
nomic principles  have  not  made  sufficient  headway,  even  unto 
this  day,  to  entirely  eliminate  this  so-called  national  feeling. 
Characteristic,  in  varying  degrees,  of  all  countries,  it  has  al- 
ways been  an  obstacle  to  congruity  in  commercial  arrange- 
ments and  has  played  an  important  part  in  preventing  mone- 
tary agreements  and  a  uniformity  in  coinage.  As  a  popular 


14  THE  LATIN  UNION 

sentiment,  it  doubtless  has  been  and  is,  so  far  as  it  remains, 
a  source  of  strength  which  any  nation  may  be  proud  of,  but 
it  would  not  have  suffered  in  quality  by  a  limitation  of  its  ap- 
plication when  interfering  with  an  intelligent  appreciation 
of  the  great  advantages  to  be  derived  from  measuring  com- 
modities and  financial  obligations  with  accuracy  and  honesty. 
By  1834  the  absence  of  specie  had  become  sufficiently  ag- 
gravating to  induce  Congress  to  do  something,  and  under  the 
leadership  of  Benton  the  ratio  between  gold  and  silver  was 
changed  from  15  to  1  to  16  to  1.  The  professed,  and,  evi- 
dently, real  purpose  of  this  legislation  was  to  reinstate  gold 
in  the  currency.  It  was  the  deliberate  intention  to  rate  gold 
too  high,  to  put  a  premium  on  it,  so  that  the  product  of  the 
newly  discovered  mines  in  the  South  might  be  kept  in  the 
country  and  foreign  gold  might  be  imported.  If  the  premium 
simultaneously  put  on  the  exportation  of  silver  was  thought  of, 
there  was  no  worrying  over  it.  Congress  was  not  uninformed 
of  the  advantages  of  adopting  a  ratio  in  harmony  with  that 
prevailing  in  some  of  the  larger  European  states,  but  uniform- 
ity was  not  the  purpose.  The  adoption  of  the  French  ratio 
was  urged,  some  gold  monometallists  have  held,  by  those  who 
simply  desired  silver  monometallism;  but,  on  the  contrary,  it 
seems  clear  that  it  was  honestly  advocated  with  the  single  view 
to  uniformity.  Another  effort  was  made  to  secure  the  ratio 
of  15.85  —  about  the  English  mint  ratio  —  but  that  was  also 
voted  down,  by  a  majority  determined,  as  Calhoun  plainly 
said,  if  any  mistake  were  to  be  made,  to  favor  gold.  By  mak- 
ing the  relative  value  1 6  to  1  another  discord  was  added  to  the 
monetary  conditions  of  the  world  with  its  varying  ratios,  ar- 
tificially affecting  the  natural  flux  of  the  precious  metals.  If 
the  French  ratio  had  been  adopted,  a  closer  assimilation  in 
coinage  might  not  have  followed  in  the  next  generation  when 
the  subject  attracted  general  attention,  but  it  would  have  been 
possible  and  probable.  A  coinage  union  with  France  would 


THE  ACT  OF  18M  15 

have  greatly  changed  the  future  course  of  monetary  events,  at 
least,  and  it  is  doubtful  if  there  would  have  been  a  Silver  Ques- 
tion in  the  nineteenth  century.  In  his  "  Thirty  Years'  View," 
Benton  himself  declared  that  "  the  French  ratio  was  the  ratio 
of  nearly  all  who  seemed  best  calculated  from  their  pursuits 
to  understand  the  subject;  "  but  for  other,  and,  as  he  thought, 
practical  reasons,  he  favored  the  ratio  of  16  to  1,  around  which 
the  friends  of  a  gold  currency  rallied.  A  slight  change  was 
made  in  the  ratio  in  1837  by  adding  a  trifle  to  the  weight  of 
gold  coins  and  reducing  the  fineness  for  the  purpose  of  con- 
forming more  closely  to  the  decimal  system.  It  was  unim- 
portant in  its  effects. 

There  was  considerable  boasting  over  the  gold  coins  which 
soon  made  their  appearance  and  which  were  popularly  dubbed 
"  Benton  Mint-drops  "  or  "  Jackson  Yellow-boys"  ;  it  was 
natural  to  seek  to  make  political  capital  of  them  before  a 
people  which,  up  to  that  time,  had  seldom  seen  an  American 
coin.  But  the  pleasant  experience  was  all  too  brief.  The 
flight  of  the  larger  silver  pieces  did  not  appear  alarming  so 
long  as  there  were  substitutes,  but  soon  the  old  and  worn  frac- 
tional pieces  followed,  and  the  plain  people,  who  so  admired 
Jackson,  found  themselves  greatly  inconvenienced  by  a  lack 
of  change,  which,  rather  than  gold,  was  always  the  medium 
of  their  everyday  transactions.  Half-dollars,  quarters,  dimes, 
and  half -dimes  were  turned  out  of  the  mints  from  1834  to  1850 
to  an  amount  almost  as  large  as  the  coinage  of  gold.  A  few 
silver  dollars  were  struck  —  something  that  had  not  occurred 
at  the  mint  for  thirty  years  —  but  everything  in  the  shape 
of  silver  was  immediately  exported.  Matters  became  still 
worse  when  gold  began  to  pour  into  the  mint  from  the  newly 
discovered  mines  of  California.  But  for  the  use  of  small 
notes,  in  varying  degrees  of  depreciation,  the  domestic  trade 
and  industry  would  have  been  hampered  more  than  it  was. 
In  1851  the  law  creating  the  silver  three-cent  piece,  three-quar- 


16  THE  LATIN  UNION 

ters  fine,  was  passed,  and  more  than  a  million  dollars'  worth 
were  coined  in  three  years  in  the  effort  to  supply  the  deficiency. 
Standard  silver  coins  rose  to  a  premium  of  5  per  cent.,  and  the 
total  silver  coinage  fell  from  $2,558,580,  in  1846,  to  only 
$774,397  in  1851,  and  in  1852  more  debased  three-cent 
pieces  were  coined  than  of  all  the  other  denominations  put  to- 
gether. They  alone  would  circulate. 

The  result  was  the  law  of  1853,  which  reduced  the  weight 
of  half-dollars  from  206^  to  192  grains,  and  of  the  lesser  coins 
proportionally,  while  their  legal  tender  was  limited  to  sums 
of  $5,  and  their  coinage  to  government  account.  In  adopting 
this  law  Congress  chose,  as  it  considered,  the  least  objection- 
able of  two  alternatives.  It  had  either  to  increase  the  value 
of  gold  in  gold  coins  or  reduce  that  of  silver  in  silver  coins. 
By  taking  the  former  course  the  possibility  of  again  losing 
gold  had  to  be  faced;  by  taking  the  latter  both  metals  might 
be  kept  current,  but  silver  would  be  entirely  subsidiary  and 
the  standard  would  be  gold,  as  in  England,  which  kept  its 
silver  in  circulation  by  debasing  it.  One  serious  objection 
to  the  former  course  was  that  the  coinage  of  gold  had  become 
so  great  that  the  government  could  not  afford  to  recoin  so 
much  unless  there  appeared  to  be  some  great  compensating  ad- 
vantage, and  they  saw  none;  indeed,  they  wanted  the  gold 
standard  and  said  so,  being  fully  aware  of  what  they  were  do- 
ing. In  introducing  the  bill  which  afterwards  became  the  act, 
Representative  Dunham,  on  behalf  of  the  Committee  on  "Ways 
and  Means,  said: 

"  Another  objection  urged  against  the  proposed  change  is  that  it 
gives  us  the  standard  of  gold  only.  What  advantage  is  to  be  gained 
by  a  standard  of  the  two  metals  which  is  not  as  well,  if  not  better, 
obtained  by  a  gold  standard  I  am  not  able  to  perceive,  while  there 
are  very  great  advantages  resulting  from  it,  as  the  experience  of 
every  nation  which  has  attempted  it  has  proved.  Indeed,  it  is 
utterly  impossible  that  you  should  maintain  a  double  standard.  Gen- 
tlemen talk  about  a  double  standard  of  gold  and  silver  as  a  thing 
that  exists,  and  that  we  propose  to  change.  We  have  had  but  a 
single  standard  for  the  last  three  or  four  years.  That  has  been  and 


THE  ACT  OP  1853  17 

is  now  gold.    We  propose  to  let  it  remain  so,  and  to  adapt  silver  to 
it  and  regulate  It  by  It." 

It  has  been  too  commonly  overlooked  in  recent  discussions 
that  the  "  dollar  of  our  daddies  "  was  thus  lightly  esteemed  by 
the  "  daddies  "  themselves.  With  a  proper  understanding  of 
the  manner  in  which  the  question  of  standards  was  regarded 
in  the  fifties  and  sixties,  and  by  carefully  following  the  de- 
velopment of  events,  the  misapprehensions  which  have  so  con- 
fused the  Silver  Question  in  recent  years  can  be  largely 
avoided.  We  shall  see  later  and  the  more  we  progress  in  this 
study  that  apparently  the  human  mind  is  quite  differently 
affected  by  a  sudden  and  marked  appreciation  in  gold  and  a 
similar  depreciation  in  silver.  Governments  in  Europe  had 
been  laboring  with  the  same  problem,  and  were  favoring 
practically  the  same  course,  though  warned  by  some  eco- 
nomists that,  with  another  flood  of  gold  coming  in  from  Aus- 
tralia, gold  would  have  to  be  demonetized. 

But  from  no  quarter,  so  far  as  I  have  been  able  to  observe, 
came  any  suggestion  of  an  international  conference  or  con- 
vention to  attempt  the  regulation  of  the  relative  value  of  gold 
and  silver.  Each  nation  showed  anxiety  to  keep  its  own 
specie,  too  well  satisfied  with  the  new  wealth  of  gold  to  take 
any  steps  against  it,  and  needing  silver  for  change  too  much 
to  think  of  any  other  course  than  overvaluing  it  at  the  mints. 
In  order  to  preserve  their  silver  they  debased  it,  thus,  in  effect, 
instituting  the  gold  standard,  a  standard  of  the  cheaper,  the 
depreciated  metal.  While  mints  were  nominally  open  to 
silver  at  old  ratios,  holders  of  bullion  naturally  declined  to 
convey  it  there  to  be  stamped  for  less  than  it  was  worth.  It 
was  also  true  that  political  conditions  in  Europe  and  other  cir- 
cumstances offered  no  inducements  for  international  action 
as  to  the  ratio,  had  any  nation  requested  it. 

But  other  subjects  were  frequently  suggested  for  such 


18  THE  LATIN  UNION 

action,  and,  among  them,  the  old  one  of  uniform  weights  and 
measures  and  of  the  decimal  system,  on  the  merits  of  which 
a  polemic  discussion  had  been  going  on  in  England  for  some 
time.  It  will  now  be  interesting  to  watch  the  development  of 
this  idea  and  to  observe  its  outcome. 

At  the  International  Exhibition  at  London  in  1851  scien- 
tific assemblies  discussed  extensively  a  common  system  of 
weights  and  measures,  and  also  of  coins,  but  nothing  was  done, 
though  at  its  close  the  London  Society  for  the  Encouragement 
of  Art,  Industry,  and  Commerce  informed  the  government 
that  it  would  be  well  to  consult  the  neighboring  nations,  to 
see  if  measures  could  not  be  taken  to  hasten  the  adoption  of 
a  uniform  system  for  the  entire  world.  The  International 
Statistical  Congress  at  Brussels,  in  1853,  debated  the  subject 
still  further,  but  could  not  agree  on  any  proposal.  At  the 
next  Statistical  Congress,  which  was  held  in  Paris  two  years 
later  in  connection  with  the  Exposition,  Louis  Napoleon,  who 
had  shortly  before  been  declared  Emperor,  used  his  efforts  to 
secure  the  extension  of  the  metric  system ;  but  here  also  there 
was  a  failure  to  agree  upon  a  plan  of  concerted  action,  though  a 
large  number  from  the  juries  and  committees  of  the  different 
countries  signed  a  declaration  strongly  urging  uniformity  in 
weights,  measures,  and  coins. 

Informed  of  these  facts  and  observing  also  the  active  agita- 
tion of  the  subject  in  England  by  the  Decimal  Association  and 
others,  the  Congress  of  the  United  States  revived  the  subject, 
and  in  1856  passed  a  joint  resolution  directing  the  Secretary 
of  the  Treasury  to  appoint  a  commissioner  to  confer  with  the 
proper  functionaries  of  Great  Britain  "  in  relation  to  some  plan 
of  so  mutually  arranging,  on  a  decimal  basis,  the  coinage  of  the 
two  countries  that  the  respective  units  "  should  be  thereafter 
easily  and  exactly  commensurable.  The  finance  committee 
of  the  Senate,  in  reporting  the  resolution,  remarked  that  "  no 
measure  could  be  readily  suggested  the  realization  of  which 


SEEKING  A  CONFERENCE  WITH  ENGLAND  19 

would  mark  a  more  decided  epoch  in  the  history  of  commerce." 
It  might  have  been  possible,  apparently,  for  the  commissioner 
appointed  under  this  resolution  to  have  entered  into  a  con- 
ference comprehending  the  whole  question  of  coinage  with 
an  identical  relation  between  gold  and  silver  coins,  but  the 
decimal  basis  and  not  the  ratio  was  the  point  Congress  had 
in  mind  at  this  time.  A  commissioner  with  such  general  in- 
structions went  to  England,  conferred  with  the  Derby  minis- 
try, and,  returning,  reported,  in  January,  1859,  that,  "  al- 
though the  British  government  were  not  prepared  themselves 
to  take  the  initiative  with  reference  to  a  project  that  could  not 
be  carried  out  by  them  without  parliamentary  sanction,  they 
were  prepared  to  consider  and  confer  with  respect  to  any  pro- 
posal that  the  commissioner  might  be  instructed  to  make  in  be- 
half of  the  government  of  the  United  States."  ISTo  further 
prosecution  of  the  negotiations  resulted,  and  the  United  States 
were  soon  too  engrossed  in  serious  domestic  affairs  to  originate 
any  project  for  proposal.  But  even  in  the  throes  of  civil  war, 
when  our  specie  had  completely  disappeared  from  circulation, 
it  continued  to  be  the  subject  of  consideration  and  discussion. 
Only  a  few  days  before  the  government  suspended  specie  pay- 
ments, Salmon  P.  Chase,  Secretary  of  the  Treasury,  in  his 
annual  report,  invited  the  attention  of  Congress  to  the  impor- 
tance of  uniform  weights,  measures,  and  coins,  and  to  the 
worth  of  the  decimal  system  in  the  coinage  of  the  world.  Con- 
gress had  more  important  matters  to  think  about,  and  England 
was  treating  the  cause  of  the  Union  with  scant  courtesy. 
Nevertheless,  Secretary  Chase  renewed  the  suggestion  in  1862, 
stating  that  "  the  present  demonetization  of  gold  may  well  be 
availed  of  for  the  purpose  of  taking  one  considerable  step 
towards  these  great  ends." 

It  is  well  to  notice  here  the  secretary's  remark  concerning 
the  demonetization  of  gold.  Had  it  not  been  his  understand- 
ing,  as  it  was  of  every  one  else  after  the  act  of  1853,  that  gold 


20  THE  LATIN  UNION 

was  the  standard,  he  would  naturally  have  coupled  silver  with 
gold  in  his  statement  referring  to  demonetization  by  the  sus- 
pension of  specie  payments  or  by  exportation.  The  theory  of 
^  the  gold  standard  was  accepted  by  common  consent  and  was 
not  conceived  in  ignorance  or  in  malice  towards  silver.  The 
secretary  evidently  had  only  the  possibilities  of  gold  in  mind 
in  all  he  had  to  say  upon  the  subject.  "  If,"  he  continued, 
"  the  half-eagle  of  the  Union  be  made  of  equal  weight  and 
fineness  with  the  gold  sovereign  of  Great  Britain,  no  sensible 
injury  could  possibly  arise  from  the  change,  while,  on  resump- 
tion of  specie  payments,  its  great  advantage  would  be  felt  in 
the  equalization  of  exchange  and  the  convenience  of  com- 
merce. This  act  of  the  United  States,  moreover,  might  be  fol- 
lowed by  the  adoption  by  Great  Britain  of  the  federal  deci- 
mal divisions  of  coin,  and  thus  a  most  important  advance  might 
be  secured  towards  an  international  coinage  with  values  deci- 
mally expressed." 

That  commercial  bodies  and  the  government  of  the  United 
States,  even  in  a  severe  civil  strife,  should  have  continued  to 
advance  these  propositions  is  not,  perhaps,  so  strange  as  it 
seems,  for  they  were  being  agitated  in  Europe,  and  an  eco- 
nomic opinion  in  their  favor  was  fast  crystallizing.  Attention 
had  been  drawn  to  them  in  Germany  in  the  discussion  over  the 
monetary  treaty  of  1857,  already  referred  to,  a  discussion 
which  was  the  beginning  of  that  movement  for  monetary  re- 
form culminating  in  1873.  The  International  Statistical 
Congress  at  Vienna  in  1859  made  another  declaration  in  favor 
of  uniformity,  and  in  1862  the  English  House  of  Commons 
went  so  far  as  to  appoint  a  committee,  and,  on  its  report,  the 
metric  system  was  made  legal  and  optional.  There  was  some 
talk  of  instituting  decimal  coinage,  but  the  matter  was  con- 
sidered premature.  By  1862,  when  Secretary  Chase  made  his 
recommendations,  the  advocacy  of  the  reduction  of  existing 
units  of  money  to  a  small  number  on  a  decimal  basis  had  be- 


INTERNATIONAL  UNIFORMITY  IN  COINAGE  21 

come  quite  general  among  commercial  bodies  and  economists. 
Another  Statistical  Congress,  held  at  Berlin  in  1863,  at  which 
the  nations  were  generally  represented,  voted  unanimously 
that  the  different  governments  "  be  invited  to  send  to  a  special 
congress  delegates  authorized  to  consider  and  report  what 
should  be  the  relative  weights  in  the  material  system  of  gold 
and  silver  coins,  and  to  arrange  the  details  by  which  the  mone- 
tary system  of  different  countries  "  might  be  fixed,  upon  a 
single  unit  decimally  subdivided. 

This  congress,  though  not  convened  to  consider  monetary 
questions  especially,  may  be  regarded  as  the  starting-point 
in  international  deliberations  on  the  subject.  No  general  as- 
sembly of  nations  by  delegates  duly  accredited  had  ever  before 
been  held  in  which  the  question  of  general  monetary  unifi- 
cation had  been  so  openly  and  seriously  discussed.  Before 
that  the  advocacy  of  unification  had  been  principally  confined 
to  weights  and  measures,  but  in  1863  that  phase  of  it  was 
subordinated  to  uniform  coinage  and  wellnigh  laid  aside.  The 
representative  of  the  United  States  was  Samuel  B.  Ruggles, 
a  leading  member  of  the  New  York  Chamber  of  Commerce,  a 
statistician  and  economic  student  of  high  repute  in  this  coun- 
try. He  found  at  Berlin  a  large  and  influential  delegation 
from  Great  Britain  zealously  engaged  in  an  endeavor  to  unify 
the  money  of  the  world.  A  special  committee  composed  of 
delegates  of  fourteen  different  governments  was  appointed  to 
consider  the  subject,  and  it  made  an  elaborate  report,  mainly 
prepared  by  Samuel  Brown  and  Prof.  Leone  Levi,  of  King's 
College,  London,  recommending  the  decimalization  of  the 
pound  sterling  and  the  making  of  it  a  monetary  unit.  It 
further  proposed  in  respect  to  silver  coins  that  the  dollar,  re- 
duced in  value  to  5  francs,  the  florin,  made  equal  in  value  to  2-J 
francs,  and  the  franc  itself  should  be  units,  all  of  them  deci- 
mally subdivided.  The  delegates  of  the  United  States  objected 
to  the  adoption  of  the  four  units,  mainly  on  the  ground  that  it 


22  THE  LATIN  UNION 

would  tend  to  preserve  the  double  standard  of  gold  and  silver, 
and  thus,  to  use  his  words,  "  prolong  the  vain  attempt  to  fix  by 
legislative  enactment  the  relative  value  of  the  two  metals,  in 
their  nature  necessarily  mutable  and  governed  only  by  the 
fundamental  law  of  supply  and  demand."  In  the  course  of 
the  discussion,  a  suggestion  was  made  by  Dr.  Farr,  Register- 
General  of  the  United  Kingdom,  and  one  of  the  most  dis- 
tinguished of  the  British  delegates,  that  the  gold  dollar  of 
the  United  States  should  be  made  equal  to  one-fifth  of  the  Eng- 
lish sovereign.  To  this  Ruggles  replied  in  behalf  of  the 
United  States  that  both  the  sovereign  and  the  half -eagle  should 
be  reduced  to  the  value  of  25  francs,  thereby  unifying  at  once 
the  gold  coinage  of  the  three  nations.  The  difference  of  opin- 
ion on  this  point  between  the  delegates  of  Great  Britain  and  of 
tho  United  States  led  the  Congress  to  adjourn  without  making 
more  than  a  general  declaration  and  asking  for  a  special  con- 
gress to  devise  a  plan.  Had  England's  proposition  been  ac- 
cepted at  this  moment,  when  the  enthusiasm  of  some  of  her 
leading  men  was  at  its  height,  it  might  in  time  have  led  to 
international  bimetallism  and  changed  the  whole  course  of 
monetary  events.  But  the  sentiment  for  a  single  gold  stand- 
ard had  gained  too  much  headway,  especially  among  the  nomi- 
nally bimetallic  states. 

This  gradual  movement  towards  international  action  on  the 
money  question  was  stimulated  by  various  conditions  in  differ- 
ent countries.  Moreover,  the  period  from  1850  to  18G5  was 
one  of  earnest  scientific  thought  everywhere,  and  largely  upon 
new  lines.  We  cannot  fail  to  distinguish  points  of  similarity 
between  this  time  and  the  period  of  the  renaissance  in  the  six- 
teenth century,  the  latter  following  the  influx  of  precious 
metals  from  the  !N"ew  World,  and  the  former  following  the 
most  remarkable  increase  of  gold  production  in  history.  A 
new  drift  had  been  given  to  thought  by  the  writings  of  such 
men  as  Darwin,  Huxley,  Tyndall,  and  Spencer.  There  was 


ANOTHER  RENAISSANCE  23 

a  disposition  to  find  a  scientific  basis  and  an  evolutionary  rea- 
son for  everything  —  even  the  world's  monetary  systems. 
Nothing  but  the  logical  would  hold,  and  the  double  standard 
seemed  illogical.  It  was  believed,  also,  that  the  double  stand- 
ard had  failed  in  practice,  though  with  such  diversity  in  de- 
creed ratios  it  could  hardly  be  otherwise.  At  this  same  period 
the  world  recognized  an  expansion  of  international  feeling,  due 
directly,  perhaps,  to  the  development  of  steam-power  and  to 
the  discovery  of  the  untold  possibilities  of  electricity.  Interna- 
tional congresses  began  to  be  common.  Besides  the  statis- 
tical meetings  to  which  reference  has  been  made,  the  Postal 
Congress  in  Paris,  in  1863,  first  suggested  by  the  United 
States,  is  a  notable  example.  There  also,  as  the  delegate  of  the 
United  States  reported,  the  question  of  uniform  coinage  was 
extensively  discussed,  "  on  the  side." 

But  while  affairs  were  thus  slowly  working  to  bring  about 
an  international  monetary  conference,  the  French  Emperor 
saw  an  opportunity  to  act  with  more  dispatch  and  with  greater 
glory  to  the  French  name.  Louis  Napoleon  was  in  the  zenith 
of  his  imperial  power.  The  world  has  quite  fully  appreciated 
his  weak  points,  not  so  his  strong  ones.  Cold,  calculating, 
silent  as  the  grave,  as  ambitious  and,  upon  occasion,  as  un- 
scrupulous as  any  monarch  who  ever  lived,  he  did  not  hesitate 
to  play  for  the  highest  stakes.  His  timidity  in  the  face  of  un- 
favorable conditions  was  no  more  remarkable  than  his  desper- 
ate audacity  when  they  seemed  to  favor  him,  and  his  faculty 
for  quickly  perceiving  an  opportune  moment,  generally  with 
accuracy,  was  inherited  from  his  celebrated  uncle,  and  trained 
by  constant  use  in  early  life,  the  dream  of  which  wras  the  throne 
of  France.  Before  1848,  often  in  mean  obscurity,  though  a 
Napoleon,  he  was  regarded  by  the  French  leaders  with  con- 
tempt. When  he  suddenly  appeared  at  Paris  at  the  time  of 
the  overthrow  of  Louis  Philippe,  the  delegates  considered  him 
too  innocuous  to  require  them  to  take  the  trouble  to  impose 


24  THE  LATIN  UNION 

banishment;  yet  within  two  months  he  was  elected  to  the  Na- 
tional Assembly  from  four  different  departments,  and  before 
the  close  of  the  year  was  chosen  President  by  an  overwhelming 
majority  over  the  greatest  statesmen  of  the  time  in  France. 
The  so-called  coup  d'etat  of  1851  required  uncommon  au- 
dacity, but  it  was  characteristic.  He  saw  his  chance,  seized 
it,  and  succeeded.  Step  by  step,  each  time  by  the  overwhelm- 
ing sanction  of  the  French  people,  he  kept  his  course,  and  in 
1862  he  was  the  first  monarch  of  Europe.  "  He  had  overawed 
England,  defeated  Russia,  and  treated  Italy  as  a  magnanimous 
patron."  Under  his  command  the  French  arms  had  again  ac- 
quired something  like  the  old  Napoleonic  glory,  in  Eastern 
wars,  and  at  Magenta  and  Solferino,  completely  breaking  Aus- 
tria's power  over  the  South  German  states.  Neither  a  fool  nor 
a  man  entirely  a  knave  could  have  accomplished  so  much,  even 
with  the  French  spirit,  for  his  ambition  was  not  confined  to  the 
possible  glories  of  war.  He  had  made  Paris  the  first  city  in  the 
world,  tearing  down  the  old  rookeries  in  which  revolutions  had 
been  hatched,  and  running  over  their  sites  magnificent  boule- 
vards. He  did  much  to  build  up  the  commerce  of  the  coun- 
try, to  develop  its  railroad  system  and  its  mining  and  manu- 
facturing interests.  The  French  people,  freed  from  anarchy 
for  several  years,  and  directed  into  industrial  channels,  be- 
came as  a  nation  more  practical  than  ever  before  and  more 
prosperous.  Largely  by  the  Emperor's  energy,  the  Suez 
Canal  had  become  a  reality,  and  more  than  any  other  monarch 
of  those  days  he  dabbled  in  political  economy  in  search  of  ways 
to  extend  the  French  name  and  influence.  While  dreaming 
of  a  new  imperialism  in  Mexico,  he  was  also  watching  the  new 
economic  movement  among  the  nations  —  watching  for  op- 
portunities. 

In  1863  he  saw  one.  He  had  studied  the  development  of 
the  sentiment  for  an  international  conference  on  the  subject 
of  weights,  measures,  and  coinage,  and  upon  every  opportu- 


NAPOLEON  PERCEIVES  AN  OPPORTUNITY  25 

nity  had  cultivated  a  scientific  opinion  in  favor  of  French 
methods.  It  was  not  like  Napoleon  to  wait  until  some  other 
nation  gained  the  fame,  and,  perhaps,  the  advantage  of  taking 
the  initiative.  He  was  quick  to  see  that,  if  the  United  States 
adopted  for  their  half-eagle  the  weight  and  fineness  of  the 
English  sovereign,  as  Secretary  Chase  was  proposing,  it  would 
not  only  be  of  great  advantage  to  England,  but  would  compel 
France  to  change  her  whole  coinage  system  without  getting 
any  glory  from  it.  His  agents  were  active  at  the  Postal  Con- 
gress and  at  the  Statistical  Congress  in  18G3,  and  four  months 
later  he  sent  out  letters  inviting  all  the  sovereigns  of  Europe, 
or  their  deputies,  to  another  congress,  ostensibly  for  the  pur- 
pose of  settling  various  questions  which  appeared  to  threaten 
the  peace  of  Europe.  The  Continental  states  assented,  but 
England,  whose  plenipotentiaries  had  not  long  before  quit 
Mexico  upon  observing  the  Emperor's  real  purpose  there,  de- 
clined the  invitation  on  the  ground,  as  stated  by  Lord  Russell, 
that  such  measures  of  prospective  legislation  were  more  likely 
to  embroil  the  several  powers  than  to  establish  peace.  The 
project  was,  therefore,  abandoned,  and  has  always  remained 
something  of  a  mystery  from  a  political  point  of  view. 

The  career  of  Louis  Napoleon  offers  little  ground  for  the 
belief  that  he  cared  so  much  for  peace  if  he  saw  that  war  might 
afford  him  greater  opportunities.  But  just  at  that  time  he 
was  interested  in  preserving  a  season  of  peace  with  France  at 
its  centre.  He  had  in  mind  for  the  near  future  a  great  Inter- 
national Exposition,  to  be  held  at  the  newly  beautified  Paris, 
something  that  would  impress  the  world  with  the  glories  of 
the  second  Napoleonic  regime,  and  at  the  same  time  afford  op- 
portunities for  international  gatherings  for  the  consideration 
of  such  subjects  as  the  unity  of  coinage.  The  idea  had  been 
quietly  fostered  at  the  Postal  Congress,  and  for  some  time  the 
various  governments  were  prepared  for  the  decree  which  went 
forth  early  in  1865  for  the  exposition  of  1867. 


26  THE  LATIN  UNION 

One  of  the  first  steps  for  its  promotion  was  the  formation 
of  the  Imperial  Commission,  with  Prince  Jerome  Napoleon  as 
its  head.  It  was  a  body  not  only  French,  but  Napoleonic.  It 
set  to  work  to  prepare  for  the  organization  of  the  different  de- 
partments of  the  fair,  and  one  of  its  first  steps  was  the  organiza- 
tion of  a  scientific  commission,  an  act  approved  by  the  Em- 
peror in  July,  1865,  the  objects  of  which  were,  according  to 
the  act,  first,  to  indicate  the  best  means  of  representing  at  the 
fair  the  recent  advances  of  science,  and,  second,  to  contribute 
to  the  extension  of  the  employment  of  useful  discoveries  and 
"to  encourage  reforms  of  international  interest,  such  as  the 
adoption  of  uniform  weights  and  measures,  identical  scientific 
unities,"  etc.  It  was  composed  of  Frenchmen  appointed  di- 
rectly by  the  Imperial  Commission,  and  later  foreign  mem- 
bers were  added  by  appointment  of  different  governments,  ap- 
proved by  the  Imperial  Commission. 

While  this  commission  was  at  work,  and  to  some  extent  as 
a  result  of  its  work,  the  Latin  Union  was  formed.  It  may  be 
too  much  to  assume  that  Napoleon  was  so  deep  a  schemer  as 
to  have  planned  this  union  for  the  effect  it  would  have  upon  an 
international  monetary  conference  which  he  had  determined 
to  assemble,  if  he  could,  at  Paris,  during  the  exposition.  So 
far  as  external  appearances  go  —  they  were  very  unsafe  guides 
to  Napoleon's  diplomacy  —  the  Latin  Union  seemed  the  nat- 
ural result  of  circumstances  which  France  was  compelled  to 
recognize,  and  of  which  she  took  wise  advantage,  but  it  will 
pay  to  study  it  in  the  light  of  associated  events.  This  con- 
ference at  Paris  in  the  fall  of  1865  was  the  first  important 
monetary  meeting  on  international  lines,  the  only  one  that 
ever  resulted  in  a  treaty,  and,  whether  intentionally  or  not,  it, 
in  a  great  degree,  moulded  the  character  of  the  general  mon- 
etary conference  at  the  same  place  two  years  later,  from  the 
economic  effects  of  which  grew  the  Silver  Question. 

To  clearly  apprehend  the  professed  reasons  for  the  forma- 


SILVER  DRIVEN  OUT  OP  FRANCE  27 

tion  of  the  Latin  Union,  it  will  be  well  to  refer  again  to  the 
relative  condition  and  value  of  gold  and  silver,  especially  as 
they  affected  France.  The  value  of  bar  silver  at  the  average 
quotations  in  London  per  ounce,  British  standard,  the  approxi- 
mate intrinsic  vahie  in  francs  and  its  fractions  of  the  5-franc 
piece,  and  the  average  ratio  of  silver  to  gold  were,  for  the  ten 
years  previous  to  the  conference  of  1865,  as  follows: 


Year. 

Pence. 

Francs. 

Ratio. 

Year. 

Pence. 

Francs. 

Ratio 

ia55 

61.313 

5.04 

15.38 

1860 

61.688 

5.07 

15.29 

1856 

61.313 

5.04 

15.38 

1861 

60.813 

5 

15.50 

1857 

61.750 

5.07 

15.27 

1862 

61.438 

5.04 

15.35 

1858 

61.313 

5.04 

15.38 

1863 

61.375 

5.04 

15.37 

1859 

62.063 

5.10 

15.19 

1864 

61.375 

5.04 

15.37 

Since  1813  the  commercial  ratio  of  silver  to  gold  had 
averaged  less  than  16  to  1,  and  only  once  since  1851,  in  1861, 
had  it  averaged  as  high  as  15.50  to  1.  The  effect  on  French 
silver  coins  may  be  imagined.  The  5-franc  pieces  disap- 
peared. Whereas  all  large  payments  were  formerly  made  in 
sacks  of  5-franc  pieces,  soon  after  the  gold  discoveries  they 
were  made  in  gold,  and  the  old  5-franc  pieces  were  either  ex- 
ported or  melted  down  and  replaced  by  gold  coins.  That 
metal  being  depreciated  as  to  silver,  there  was  a  sure  profit  to 
speculation.  But  while  the  diffusion  of  small  gold  pieces  pre- 
vented serious  inconvenience  at  first,  a  new  difficulty  was  en- 
countered when,  the  5-franc  pieces  having  disappeared,  the 
fractional  coins,  2  francs  and  less,  began  to  vanish  under  the 
speculator's  wand.  This  difficulty  appeared  later  in  France 
than  elsewhere,  and  it  was  not  till  1864  that  she  followed  the 
•example  of  other  countries  in  reducing  the  fineness  of  smaller 
silver  coins.  But,  unfortunately,  the  steps  taken  by  different 
governments  had  shown  no  uniformity.  Although  Italian 
coins  had  the  fineness  of  .835  — that  adopted  by  France  — 
Switzerland  had  chosen  that  of  .800.  France  soon  saw  rea- 
son to  fear  that  the  Swiss  coins,  introducing  themselves  into 
circulation  by  way  of  the  eastern  frontier,  would  usurp  the 


28  THE  LATIN  UNION 

place  belonging  to  the  national  coin.  In  fact,  the  government 
reported  that  Swiss  coins  had  already  penetrated  into  some 
French  provinces,  giving  rise  to  disputes  and  doubt  in  transac- 
tions between  private  persons.  In  April,  1864,  therefore,  the 
government  prohibited  the  admission  of  Swiss  coins  in  public 
offices  of  receipts. 

Meanwhile,  Belgium  had  instituted  an  examination  into 
the  question  of  the  diminished  fineness  of  its  silver  change, 
and,  in  correspondence  with  the  French  government  on  the 
subject,  the  utility  of  a  treaty  between  the  four  nations  whose 
monetary  systems  rest  on  numeration  by  francs  was  suggested. 
Napoleon  at  once  dispatched  invitations  to  the  governments  of 
Belgium,  Switzerland,  and  Italy,  to  send  delegates  to  meet  its 
owrn  representatives  at  Paris. 

While  the  situation  was  such  as  might  suggest  this  action, 
it  is  difficult  to  believe  that  it  was  so  serious  as  to  have  led  to 
it  at  that  time  had  there  not  been  other  motives  at  work.  The 
sole  cause  of  disturbance  was  a  difference  of  35  thousandths  in 
the  fineness  of  Swiss  fractional  coins,  with  those  of  France  and 
Italy.  That  France  should  wrorry  over  the  introduction  of  a 
few  Swiss  coins  into  her  territory,  displacing  national  coins, 
and  then  form  a  treaty  making  all  coins  of  three  states  legal 
throughout  her  territory,  is  not  easily  understood.  Her  en- 
trance into  such  an  important  alliance  in  the  midst  of  prepara- 
tions for  an  unparalleled  exposition  shows  a  haste  which  the 
emergency  did  not  seem  to  warrant.  The  conference  opened 
on  November  20,  1865,  under  the  presidency  of  Parieu,  Vice- 
President  of  the  French  Council  of  State,  an  extensive  writer 
upon  coinage  questions  and  the  manager  of  the  French  pro- 
gramme. The  other  French  delegates  were  Pelouze,  Minis- 
ter of  Finance,  Ilerbet,  representing  the  Ministry  of  Foreign 
Affairs,  and  Julien,  representing  the  Ministry  of  Agriculture, 
Commerce,  and  Public  "Works.  Belgium's  delegates  were 
Frederic  Fortamps  and  M.  A.  Kreglinger;  Italy's,  Isaac  Ar- 


QUADRIPARTITE  AGREEMENT  OF  1863  29 

torn  and  Valentin  Pratolongo;  Switzerland's,  Dr.  Kern,  Min- 
ister to  France,  and  Charles  Feer-Herzog,  member  of  the  Swiss 
National  Council. 

As  a  result  of  the  deliberations  of  these  delegates,  con- 
vened to  remedy  the  slight  diversity  in  Swiss  and  French  frac- 
tional coins,  an  agreement  was  made  to  unite  in  the  regula- 
tion of  the  weight,  title,  form,  and  circulation  of  their  entire 
coinage,  of  gold  and  silver,  for  fifteen  years.  The  preamble 
of  the  articles  of  agreement  stated  that  the  four  powers,  "  ani- 
mated by  the  desire  to  effect  a  more  perfect  harmony  in  their 
monetary  legislation,  arid  to  remedy  the  inconvenience  to  trade 
between  their  respective  countries  resulting  from  the  diversity 
of  their  small  silver  coin,  and  to  contribute  to  the  uniformity 
of  weights,  measures,  and  coins,  by  forming  a  monetary 
union,"  therefore  resolved  to  conclude  a  convention  for  the 
purpose.  The  articles  show  that  the  desire  to  contribute  to 
uniformity  of  coinage  on  the  basis  of  the  franc  was  the  greatly 
predominating  consideration.  They  bound  themselves  not  to 
coin  or  permit  to  be  coined  any  gold  other  than  pieces  of  100, 
50,  20,  10,  and  5  francs  in  weight,  standard,  tolerance,  and 
diameter,  set  forth  in  detail  and  practically  from  the  French 
mint  regulations.  They  were  to  receive  any  of  these  coins 
within  their  territory  unless  worn  to  ^  per  cent,  or  their  de- 
vices effaced.  They  could  coin  silver  5-franc  pieces,  of  the 
qualities  specified,  to  be  received  in  the  different  countries 
under  the  same  conditions  laid  down  for  the  gold  coins.  The 
smaller  silver  pieces  thereafter  were  to  be  only  those  of  2  francs 
and  1  franc,  and  50  and  20  centimes,  of  a  fineness  of  .835, 
and  of  other  qualities  specified.  Pieces  of  a  different  coin- 
age were  to  be  withdrawn  from  circulation  by  January  1, 
1869,  with  a  year's  further  extension  for  certain  coins.  Pro- 
vision was  made  for  the  limited  legal  tender  of  the  small  silver 
coins  between  individuals,  and  for  the  public  banks,  and  for 
their  redemption  by  the  respective  governments,  which  should 


30  THE  LATIN  UNION 

not  issue  them  to  an  amount  greater  than  six  francs  for  each 
inhabitant,  with  certain  exceptions.  One  section,  and  an  im- 
portant one,  provided  that  any  other  nation  could  join  the  con- 
vention by  accepting  the  obligations  and  adopting  the  mone- 
tary system  of  the  union,  and  fifteen  years  was  fixed  for  the 
duration  of  the  treaty,  whereupon  it  might  be  extended. 

The  French  programme  was  carried  out  to  the  letter,  even 
to  the  retention  for  the  time  of  the  double  standard,  in  spite 
of  the  fact  that  the  delegates  of  the  Belgian,  Italian,  and  Swiss 
governments  unanimously  and  earnestly  expressed  the  desire 
that  the  principle  of  the  gold  standard  should  exclusively  pre- 
vail in  the  formation  of  the  union.  Because  France  opposed 
the  change  at  the  time,  it  has  been  assumed  to  be  another  in- 
stance of  her  heroic  devotion  to  and  defence  of  the  double 
standard.  As  a  matter  of  fact,  France  did  not  defend  the  prin- 
ciple of  the  double  standard  at  all  on  this  occasion.  Her  dele- 
gates replied  to  those  of  the  other  states,  who  could  have  out- 
voted France,  that  "  common-sense  undoubtedly  decided  for 
the  gold  standard  " ;  that  it  was  logical,  but  the  question  was 
"  premature."  Undoubtedly  it  was  premature  in  .Napoleon's 
programme.  He  preferred  to  let  matters  wait  till  he  had  as- 
sembled all  the  nations  in  a  monetary  conference,  and  then, 
in  the  face  of  a  probable  demand  for  the  gold  standard,  seem 
to  yield  the  double  standard  in  consideration  of  the  adoption 
of  the  French  coinage  as  a  basis  for  monetary  unity.  One  pre- 
requisite of  success  in  negotiations  is  to  have  something  to 
yield,  a  point  which,  as  will  be  seen,  the  United  States  have 
neglected  in  later  monetary  conferences.  The  French  dele- 
gates were  at  heart  partisans  of  the  gold  standard.  Parieu 
was  one  of  the  strongest  gold  monometallists  that  France  ever 
had,  and,  as  has  been  said,  was  the  diplomatic  manager  of  Na- 
poleon's programme. 

The  seeds  of  silver  demonetization  had  already  been 
planted.  The  difficult  experiences  in  keeping  silver  in  circu- 


GOLD  STANDARD  SOUGHT  IN  INDIA  81 

lation  had  a  good  deal  to  do  with  it,  but  the  filling  of  the  cof- 
fers of  the  great  banks  of  Europe  with  the  virgin  gold  of  Cali- 
fornia and  Australia  had  more.  The  increase  in  commercial 
activity  was  commonly  attributed  to  the  pouring  in  of  the 
yellow  metal.1  The  reason  why  the  bimetallic  states  had  not 
already  formally  adopted  the  gold  standard  by  law  was  that 
they  had  it  in  practice.  It  was  really  in  silver  states  like 
those  of  Germany  —  states,  the  reader  will  notice,  having  a 
standard  of  the  appreciated  metal  —  that  the  agitation  for  the 
gold  basis  seemed  most  pronounced.  The  question  was  even 
mooted  in  India,  the  "  sink  of  silver."  Many  Anglo-Indian 
authorities  at  this  time,  fearing  that  silver  might  become  still 
more  costly  in  relation  to  gold,  and  that  the  Indian  currency 
would  become  stinted,  thereby  causing  a  fall  in  prices  and 
serious  inconvenience,  deemed  it  desirable  to  seize  the  oppor- 
tunity to  adopt  the  gold  standard,  while  retaining  silver  as 
much  as  possible  in  circulation,  and  extending  the  issue  of 
notes.  On  account  of  the  earnest  discussion,  the  Indian  gov- 
ernment directed  specific  inquiries  to  be  made.  Sir  William 
Mansfield  (late  Lord  Standhurst),  then  a  member  of  the  su- 
preme executive  council  of  India,  argued  for  gold  with  so  much 
skill  that  many  thought  the  time  had  come  to  make  the 
change.  But  the  financial  secretary,  and  a  majority  of  the 
functionaries,  who,  paid  for  their  services  in  silver,  gained 
something  on  their  remittances  to  England,  were  loath  to  dis- 


i  "  We  find  here  [in  Great  Britain]  our  external  trade  doubled  in 
the  last  twelve  years,  and  this  external  trade  is,  we  believe,  but  a 
faint  representation  of  the  increase  of  transactions  throughout  the 
whole  of  our  domestic  industry.  But  not  only  has  this  multiplying 
process  been  carried  on  in  these  islands;  it  has  prevailed  almost  as 
largely  in  France,  and  has  spread  all  over  Germany.  It  has  filled 
Italy,  aroused  Spain  from  its  long  lethargy,  and  penetrated  even  the 
remote  provinces  of  Russia.  No  corner  of  Europe  has  remained 
insensible  to  the  new  stir  of  industry  and  enterprise.  All  these  facts 
are  indications  of  the  enormous  addition  which  has  been  made  dur- 
ing the  last  fifteen' years  to  the. extent  and  depth  of  the  channels  of 
circulation  required  to  be  filled  with  metallic  money  in  some  form  or 
other."  —  London  Economist,  May  11,  18G5. 


32  THE  LATIN  UNION 

turb  the  long-accepted  standard.  A  compromise  was  suggested 
by  which  gold  should  be  attracted  into  circulation  as  a  legal 
tender,  while  retaining  silver  as  the  standard,  and  an  attempt 
in  this  direction  was  made  by  declaring  the  English  sovereign 
legal  tender  for  ten  rupees,  an  act  which  went  into  force  in 
December,  1864,  but  was  revoked  four  or  five  years  after- 
wards on  its  being  found  that  the  coins  fetched  more  in  rupees. 
It  is  essential  to  observe  closely  the  course  of  silver  at  this 
particular  time.  The  treaty  of  the  Latin  Union  was  duly 
ratified  by  the  several  states,  and  went  into  effect  August  1, 
1866.  A  marked  change  appeared  in  the  French  silver  coin- 
age the  next  year.  From  1860  up  to  the  beginning  of  1867, 
the  average  number  of  5-franc  pieces  coined  at  the  French 
mints  was  about  40,000.  For  the  next  four  years  the  number 

was : 

1867, 10,810,312 

18G8,  .   •  .     .     .     .  18,724,110 

1869, 11,652,857 

1870, 10,729,670 

In  other  words,  the  average  became  300  times  greater.  But 
this  increase  was  not  because  of  the  treaty,  though  it  is  a  curi- 
ous fact  that  the  price  of  silver,  which  was  62^  pence  in  June, 
was  only  60|-  in  August  when  the  treaty  went  into  effect.  It 
was  at  this  time  that  silver,  after  being,  with  hardly  an  in- 
terruption, at  a  premium  as  to  gold,  dropped  below  the  French 
parity.  Since  April,  1867,  it  has  never  for  a  moment  reached 
it.  The  average  intrinsic  value  of  the  5-franc  piece  in  1866 
was  5.022,  in  1867  it  was  4.981.  Yet  the  demand  for  silver 
for  coinage  in  Europe  has  seldom  been  more  active  than  it 
was  then.  Not  a  single  nation  had  demonetized  the  metal. 
Only  two  nations  in  all  Europe  had  the  gold  standard  by  law, 
England  and  Portugal,  and  the  latter  made  little  difference. 
Southern  Germany  had  no  gold  coinage  at  all.  The  marked 
increase  in  the  production  of  silver  had  not  begun. 

What  and  where  was  the  cause  of  this  beginning  of  the 


BEGINNING  OF  SILVER'S  GREAT  FALL  33 

decline?  One  might  think  that,  the  coinage  of  legal-tender 
silver  in  France  jumping  from  185,000  francs  in  1866  to 
54,000,000  in  1867,  the  price  would  have  stiffened;  but  it  is 
also  observed  that  the  export  of  silver  from  the  empire  fell 
from  195,000,000  francs  in  1866  to  60,000,000  in  1867.  For 
twelve  years  before  1865  French  exports  of  silver  had  exceed- 
ed imports,  even  as  much  in  one  year  as  350,000,000  francs. 
In  1865,  the  opposite  tendency  began,  imports  exceeding  ex- 
ports 70,000,000  francs;  in  1866,  40,000,000,  and  in  1867 
by  180,000,000.  The  trouble,  apparently,  was  a  falling  off 
in  the  export  demand  for  silver,  altogether  out  of  proportion 
to  the  demands  for  its  coinage  and  circulation  at  home.  Turn- 
ing to  India,  the  great  absorber  of  the  metal,  we  find  that  her 
importations  of  silver  amounted  to  475,000,000  francs  in 
1866,1  and  to  only  204,000,000  francs  in  1867,1  or  considera- 
bly less  than  one-half.  No  increase  appeared  in  the  council 
bills  sold ;  it  was  simply  a  decrease  of  about  one-half  in  the  total 
remittances  to  India.  There  was  not  simply  a  decrease  in  the 
Indian  exportations  of  merchandise,  but  a  sudden  falling  off  in 
the  investment  of  English  capital  in  the  colony,  particularly 
for  railroads.  We  shall  have  occasion  to  treat  of  these  facts 
more  fully  in  the  history  of  the  next  decade.  They  are  sug- 
gested here  to  indicate  the  nature  of  the  change  that  took  place 
at  about  the  time  the  Latin  Union  treaty  went  into  effect, 
changes  which  cannot  be  attributed  to  the  treaty,  but  which 
produced  remarkable  effects  on  the  silver  coinage.  It  so  hap- 
pened that  the  union  was  formed  at  the  very  beginning  of  sil- 
ver's great  decline,  the  initial  cause  of  which  must  be  laid  at 
the  doors  of  British  India,  which,  late  in  1864,  took  a  step 
towards  the  gold  basis.  This  cause  alone,  however,  would  not 
have  produced  a  permanent  depreciation.  It  was  followed  by 
a  most  remarkable  combination  of  circumstances. 


Fiscal  year  ending  March  31. 


CHAPTER  II 

GENERAL   ACCEPTANCE   OF   THE   PRINCIPLE   OF  THE  GOLD   STANDARD  - 
CONFERENCE    OF   1867 

EVENTS  were  shaping  themselves  very  nicely  for  Napoleon's 
purposes.  The  "  silent "  man  was  not  a  dull  man.  He  was 
well  aware  that  a  monetary  union,  composed  of  France,  Italy, 
Belgium,  and  Switzerland,  would  be  a  much  more  important 
factor  in  the  general  conference  he  proposed  making  a  feature 
of  the  exposition  than  France  would  be  alone.  In  speaking 
of  uniform  coinage  at  the  time,  a  representative  of  the  French 
government  said :  "  This  convention  between  the  four  powers 
is  a  first  step  that  will  have  its  influence.  It  proposes  and  in- 
vites future  conventions.  If  the  question  comes  up  hereafter 
before  higher  powers,  as  we  hopa  it  will,  France  will  bring 
a  great  influence  with  her  forty  millions,  or,  if  expected  an- 
nexations are  realized,  her  one  hundred  millions  of  people 
using  her  monetary  system."  The  inference  is  plain.  Na- 
poleon closely  watched  developments  everywhere,  and  his 
political  agents  gave  generous  encouragement  to  any  move- 
ment favorable  to  his  designs.  He  kept  his  hands  off  while  the 
Prussians  overthrew  the  Austrians  in  the  Schleswig-Holstein 
war  in  1866,  it  is  generally  said,  because  he  was  checked  by 
political  antagonism  in  the  Chamber,  some  champions  of  the 
old  republicanism  having  been  successful  in  elections;  but  it 
is  more  probable  that  he  remained  passive  from  choice,  and 
because  of  the  pacific  economic  policy  dear  to  him  for  the  mo- 
ment. The  success  of  his  great  exposition  and  of  his  monetary 
programme  depended  largely  upon  his  neutrality  and  the 
peaceful  condition  of  Europe.  When,  in  1866,  Secretary  Sew- 


INTERNATIONAL  COINAGE  URGED  IN  CONGRESS  85 

ard  insisted  on  the  recall  of  the  French  troops  from  Mexico, 
Xapoleon  did  not  show  the  resistance  and  delay  that-  the  oppor- 
tunities afforded  him,  or  that  might  have  been  expected  from 
his  character.  The  tearful  appeals  of  Carlota  were  in  vain. 
The  fate  of  an  Austrian  prince  was  sealed  in  his  economic 
campaign. 

The  French  government  was  active  in  the  latter  part  of 
1866  in  efforts  to  secure  annexations  to  the  Latin  Union.  Dif- 
ficulties appeared  in  the  way  of  this,  but  as  to  the  general  sub- 
ject of  uniform  coinage  the  other  nations  stood  in  a  responsive 
position.  It  was  extensively  discussed  in  England,  and  money 
reform  was  one  of  the  conspicuous  features  of  that  movement 
in  which  all  the  German  states  were  drawing  closer  and  closer 
to  Prussia.  German  economic  opinion  was  already  for  gold. 

The  Treasury  officials  and  finance  committees  of  the  United 
States,  however,  said  very  little  about  gold  or  silver,  for  the 
principle  of  the  gold  standard  was  accepted  without  question, 
but  they  emphasized  the  old  provocation  for  international 
action  —  the  decimal  system.  John  A.  Kasson,  who  had  rep- 
resented this  country  at  the  Postal  Congress  of  1863,  where 
Xapoleon's  agents  were  active,  submitted  to  the  Thirty-ninth 
Congress,  in  May,  1866,  a  report  of  the  coinage  committee, 
devoting  much  space  to  the  discussion  of  the  possibilities  of  the 
general  acceptance  of  the  decimal  system.  He  suggested  that 
the  occasion  of  the  Paris  Exposition  the  following  year  would 
"  furnish  the  proper  opportunity  for  a  free  conference  between 
the  authorized  commissioners  of  the  different  governments  as 
to  the  best  means  of  establishing  a  uniform  system  of  coinage 
for  the  common  use  of  the  nations  of  the  world.  The  only  in- 
terest of  any  nation,"  the  report  went  on  to  say,  "  that  could 
possibly  be  injuriously  affected  by  the  establishment  of  this 
uniformity  is  that  of  the  money-changers  —  an  interest  which 
contributes  little  to  the  public  welfare  —  while  by  diversity  of 
coinage  and  of  values  it  adds  largely  to  private  accumula- 


36  THE  CONFERENCE  OF  18C7 

tions."  One  paragraph  in  the  document  indicates  how  little 
question  there  was  in  the  United  States  as  to  which  metal 
should  constitute  the  standard  of  value.  It  reads :  "  The  only 
indispensable  condition  of  this  uniformity  of  value  is,  that  in 
the  standard  unit,  with  its  divisions  and  multiples  used  in  com- 
merce, there  shall  be  in  all  countries  an  equal  amount  of  gold 
(or  silver)  with  fixed  proportion  of  alloy.  Each  nation  will 
retain  its  own  devices  and  legends,  and  other  peculiarities  of 
mintage.  A  common  name  for  the  standard  unit  would  be 
desirable,  but  not  essential.  The  presence  of  a  given  amount 
of  precious  metal,  mixed  with  a  given  amount  of  alloy,  is  the 
only  absolute  prerequisite  for  the  establishment  of  interna- 
tional uniformity  of  coinage." 

The  parenthetical  appearance  of  silver  after  gold  is  sug- 
gestive. It  wears  the  livery  of  an  afterthought,  as  if  the  first 
draft  of  the  report  had  not  contained  it,  but,  upon  re-reading 
and  reflection,  it  had  occurred  to  the  writer  or  to  some  one  on 
the  committee  that  silver  ought  at  least  to  be  mentioned  out  of 
courtesy,  if  not  as  a  possibility.  Naturally,  it  would  be,  in  view 
of  the  fact  that  it  was  at  that  time  either  the  sole 
standard  of  value,  or,  in  theory,  a  collateral  standard  with 
gold  in  every  nation  of  importance  in  the  world,  except  the 
English.  But  in  practice,  silver  had,  as  the  dearer  metal,  be- 
come so  subsidiary  that  the  theory  was  almost  lost  sight  of  in 
the  fact.  This  was  especially  true  in  the  United  States,  which 
were  proceeding  on  a  paper  basis.  Everybody,  in  speaking  of 
specie,  meant  gold,  without  considering  it  a  matter  demanding 
any  qualification,  and  without  being  in  danger  of  injuring  any 
one's  feelings.  Only  those  who  had  made  a  study  of  financial 
questions,  and  such  persons  were  rare  in  this  country  then, 
thought  of  the  double  standard  as  existing  even  theoretically. 
Few  in  that  generation  had  ever  seen  a  United  States  silver 
piece  of  full  legal  tender.  They  were  as  rare  as  coins  of  the 
fifteenth  century. 


IMPERIAL  COMMISSION  AT  WORK  87 

This  government  could  not  have  been  in  a  more  favor- 
able position  to  enter  into  an  agreement  as  to  coinage, 
for  it  could  yield  with  little  inconvenience  to  a  variation 
of  its  dollar  if  necessary,  its  coin  being  withdrawn  from  cir- 
culation. Moreover,  it  seemed  probable  then  that  the  con- 
sent of  the  United  States,  England,  and  France  would  ulti- 
mately result  in  the  consent  of  all  commercial  nations.  Not 
being  aware,  apparently,  of  what  was  going  on  in  the  mind  of 
Louis  Napoleon,  the  House  of  Representatives,  acting  on  Kas- 
son's  report,  early  in  1866  passed  a  resolution  authorizing  the 
President  "  to  appoint  a  special  commissioner  to  facilitate  the 
adoption  of  a  uniform  coinage  between  the  United  States 
and  foreign  countries  "  ;  but  it  was  delayed  in  the  Senate  and 
finally  abandoned,  Napoleon's  diplomatic  steps  having  come 
to  light.  The  State  Department  had  for  some  time  been  in- 
formed of  the  general  purposes  of  the  French  Emperor,  though 
his  motives  seem  to  have  escaped  detection. 

After  the  treaty  of  the  Latin  Union  went  into  effect,  the 
Imperial  Commission  devoted  its  attention  with  much  assi- 
duity to  this  branch  of  its  duties.  Several  meetings  were  held 
and  attended  by  the  members  of  the  Scientific  Commission 
and  such  of  the  foreign  commissioners  to  the  exposition  as  were 
already  at  Paris.  The  first  session,  officially  entitled  a  "  Pre- 
paratory Conference  Relative  to  the  Establishment  of  an  Inter- 
national System  of  Measures,  "Weights,  and  Coins,"  was  held 
May  2,  1866,  and  was  presided  over  by  Le  Play,  the  French 
Commissioner-General.  The  tTnited  States  were  represented 
by  N.  M.  Beckwith,  an  eminent  American  merchant  who  had 
been  appointed  Commissioner-General  for  this  country.  The 
result  was  that  at  a  later  meeting,  and  at  the  suggestion  of 
Prof.  Leone  Levi,  of  London,  it  was  decided  to  have  an  exhi- 
bition of  coins  of  various  nations,  to  appoint  an  international 
committee  to  supervise  it  and  to  take  whatever  steps  it 
deemed  best  for  drawing  public  attention  to  the  subject  of 


38  THE  CONFERENCE  OF  1867 

uniformity  in  coins.  Commissioner  Beckwith  kept  Secretary 
Seward  fully  informed  of  all  these  steps.  Early  in  July  lie 
sent  to  the  State  Department  a  copy  of  the  treaty  of  the  Latin 
Union,  which  had  just  been  ratified  by  France,  and  hinted  that 
the  United  States  could  easily  adapt  its  coinage  system  to  that 
of  the  new  union  without  substituting  the  French  unit  for 
their  own.  "  Our  gold  dollar/'  he  said,  "  is  equal  to  517  cen- 
times. A  reduction  of  17  centimes  (3^  cents)  would  leave  it  an 
exact  multiple  of  the  French  unit,  or  franc,  and  the  equivalent 
of  five  francs." 

In  October,  Secretary  Seward  notified  Beckwith  of  the  ap- 
pointment of  Samuel  B.  Ruggles,  of  J^ew  York,  as  one  of  the 
scientific  commissioners  for  this  country,  and  for  the  special 
purpose  of  acting  in  relation  to  uniform  coins.  Congress,  by  a 
law  passed  the  previous  July,  had  made  the  metric  system  legal 
and  optional  in  the  United  States. 

Napoleon  waited  while  these  operations  were  going  on,  till 
Prussia  had  finished  measuring  arms  with  Austria,  and  till 
the  close  of  the  sharp  correspondence  with  this  country  over 
Mexico,  before  setting  his  diplomatic  machinery  actively  in 
motion  in  behalf  of  the  Latin  Union.  When  peace  was  finally 
restored  in  Europe,  and  the  imperial  dream  of  Latin  political 
influence  on  the  western  continent  was  over,  he  brought  the 
subject  plainly  to  the  attention  of  the  various  governments.  It 
was  on  January  4, 1867,  that  Berthemy,  the  French  minister  to 
this  country,  officially  transmitted  to  Secretary  Seward  a  copy 
of  the  treaty  of  the  Latin  Union,  with  an  explanation  of  its 
provisions,  and  a  polite  invitation  to  the  United  States  to  ac- 
cede to  it;  or,  if  not  desiring  to  do  that,  to  either  enter  into 
arrangements  destined  to  establish  equations  between  some  of 
the  monetary  types  of  gold  and  silver,  or  to  take  part  in  an  in- 
ternational conference  at  which  might  be  discussed  the  means 
of  arriving  at  a  more  extended  monetary  understanding.  The 
treaty  of  the  union,  he  assured  Seward,  "  had  a  sole  object,  that 


FRANCE  SEEKS  ADDITIONS  TO  THE  UNION  39 

of  putting  an  end  to  the  abnormal  disappearance  of  fractional 
silver  money,"  which  was  doubtless  "  diplomatically  "  true, 
though,  in  the  extensive  plans  of  Napoleon,  the  treaty  in- 
cluded a  good  deal  more  and  served  other  and  far-reaching 
purposes. 

Commenting  on  the  conveniences  the  four  states  of  the 
union  enjoyed  in  conducting  their  gold  and  silver  coinage 
under  identical  conditions,  Berthemy  added :  "  After  having 
brought  about  the  disappearance  of  divergencies  of  which  they 
recognized  the  inconveniences,  the  delegates  of  France,  of  Bel- 
gium, of  Italy,  and  of  Switzerland,  seeing  a  population  of 
seventy  million  souls  thenceforth  endowed  with  the  same 
monetary  system,  must  quite  naturally  have  been  led  to  fix 
attention  on  an  interest  more  general,  .  .  .  the  establish- 
ment of  a  general  monetary  circulation  among  all  civilized 
states.  The  government  of  the  Emperor  would  be  very  happy 
to  see  this  proposition  well  received,  but,  at  the  same  time,  can- 
not dissemble  the  difficulties  and  objections  it  may  encounter. 
But  it  doubts  not,  at  least,  that  the  views  which  are  thus  in- 
spired correspond  with  necessities  which  henceforth  must  press 
upon  the  solicitude  of  governments." 

He  expressed  the  hope  that,  if  the  United  States  found 
objections  too  serious  to  permit  them  to  adhere  to  the  quadri- 
partite agreement  of  1865,  the  French  government  might  be  in- 
formed of  their  nature,  so  that  the  Latin  Union  might  under- 
stand the  situation,  and,  if  possible,  devise  means  of  removing 
them.  The  question  of  the  standard  of  value  is  not  mentioned 
in  the  minister's  note,  nor  the  decimal  system,  except  indirectly 
as  a  feature  of  the  French  system.  Secretary  Seward  replied, 
February  13,  that,  having  consulted  the  Secretary  of  the  Treas- 
ury (Hugh  McCulloch)  upon  the  subject,  he  had  the  honor  to 
state  that  the  United  States  government,  both  in  its  execu- 
tive and  legislative  departments,  had  repeatedly  manifested  its 
interest  in  the  question  of  international  unification  of  mone- 


40  THE  CONFERENCE  OF  1867 

tary  standards;  that  the  importance  of  a  standard  unit  of 
equal  value  in  all  commercial  countries  for  the  uses  of  account 
and  currency  was  fully  recognized  and  appreciated,  and  that 
the  ideal  object  presented  by  France  being  acceptable,  it  only 
remained  to  be  decided  how  the  desired  result  might  be  brought 
about.  He  hoped  that  neither  the  quadripartite  convention  of 
1865  nor  the  proceedings  already  adopted  under  its  provisions 
would  be  held  to  preclude  any  of  those  governments  from  en- 
tering into  considerations  in  favor  of  its  modification,  which 
might  be  offered  by  other  governments  in  the  interests  of  a 
system  universally  acceptable. 

In  thus  intimating  that  the  French  government  should 
not  hold  too  tenaciously  to  its  own  system,  possibly  Seward 
suspected  the  nature  of  the  ambition  of  the  Emperor,  whose 
efforts  were  meanwhile  prospering.  The  States  of  the  Church 
had  already  acceded  to  the  union  in  1866,  and  Greece  and 
Roumania  joined  early  in  1867,  or  at  about  the  time  of  his 
first  overtures  to  this  government.  His  proposition  seemed  to 
be  generally  received  with  favor,  the  moment  being  oppor- 
tune. But  Prussia  manifested  some  shyness.  Bismarck,  who 
had  elaborate  plans  for  the  unification  of  the  German  states 
well  in  hand,  as  a  result  of  the  victory  over  Austria,  was  not 
sure  of  what  he  wanted  in  monetary  matters,  and  was  perhaps 
a  little  suspicious  of  JSTapoleon.  In  response  to  the  latter's 
diplomatic  invitation  to  join  the  Latin  Union,  Bismarck,  on 
February  2,  1867,  caused  a  note  to  be  sent  to  the  Prussian 
minister  at  Paris,  stating  that  the  confederation  of  Northern 
Germany  was  entering  upon  "  a  political  programme  which 
may  include  its  local  monetary  systems,"  and  that  the  Chancel- 
lor might  choose  to  await  the  completion  of  the  programme 
before  entering  upon  the  subject  of  international  unification. 
Xapoleon  was  to  play  a  much  more  important  part  in  that  pro- 
gramme than  he  could  have  imagined  then.  Sedan  was  to 
figure  in  its  "  completion." 


RUGGLES  CONFERS  WITH  PARIEU  41 

On  arriving  at  Paris  in  March,  Commissioner  Ruggles1 
was  appointed  by  the  Imperial  Commission  to  the  interna- 
tional committee,  already  referred  to,  but  before  it  had  taken 
up  the  discussion  of  unifonn  coinage  Michel  Chevalier,  a 
member  of  it,  introduced  him  to  Parieu,  who  was  in  charge  of 
Napoleon's  monetary  programme,  and  with  whom  he  discussed 
the  possibility  of  the  adhesion  of  the  United  States  to  the 
Latin  Union.  Ruggles  maintained  the  same  position  that  he 
held  at  Berlin  four  years  before,  and  said  that  the  United  States 
might  be  able  to  adhere  if  the  union  would  coin  a  25-franc 
piece.  Parieu  could  not  see  the  necessity  of  it  if  the  dollar 
were  made  equivalent  to  5  francs;  for  the  gold  eagle  would 
then  have  an  equivalent  in  the  50-franc  piece.  The  greatest 
objection  that  the  French  government  seemed  to  have  to  the 
25-franc  piece  was  that  it  might  compete  with  and,  to  some 
extent,  drive  out  of  circulation  the  "  Napoleon,"  or  20-franc 
piece.  However,  Parieu  said  that  if  it  seemed  to  the  United 
States  essential  that  such  a  coin  should  be  made,  the  Latin 
LTnion  treaty  might  be  modified,  probably.  The  aim  of  the 
French  government  at  this  time,  no  more*  accessions  to  the 
union  appearing  immediately  possible,  was  to  test  the  opinion 

i  Some  usually  fair  bimetallic  writers  have  endeavored  to  re- 
flect on  the  ability  of  Ruggles,  and  belittle  his  official  position.  The 
late  Francis  A.  Walker  says  in  his  "International  Bimetallism":  "Mr. 
Ruggles  did  not  even  go  to  Paris  for  that  purpose.  He  was  already 
there  as  the  United  States  Commissioner  to  the  Exposition;  and,  to 
save  the  expense  of  sending  a  delegate  to  the  conference,  was  em- 
powered to  act  in  that  capacity."  This  is  incorrect,  as  the  letters  of 
Secretary  Seward  to  Ruggles  plainly  show.  In  his  letter  to  Com- 
missioner Beckwith  in  October.  186(i,  informing  him  of  the  appoint- 
ment of  Ruggles,  Seward  said:  "Mr.  Ruggles  represented  the 
United  States  at  the  late  Statistical  Congress  at  Berlin,  and  has 
already  been  in  correspondence  with  the  international  committee  or- 
ganized upon  that  occasion  upon  this  important  subject  (interna- 
tional coinage),  to  which  he  has  devoted  much  study."  Later,  in 
notifying  the  French  government  of  the  appointment  of  Ruggles  to 
the  conference,  Seward  said  that  he  was  "  familiar  with  the  views 
of  this  government."  Ruggles's  prejudice  for  gold  was  no  stronger 
than  the  government's,  or  than  that  of  any  one  in  the  country  at  that 
time. 


42  THE  CONFERENCE  OP  1867 

in  the  various  countries  through  the  medium  of  members  of  the 
international  committee,  and  of  the  commissioners  to  the  fair, 
as  to  making  coinage  equations  with  the  union  in  order  to  pre- 
pare as  definite  a  programme  as  possible  for  the  conference. 

As  a  result  of  his  conversation  with  Parieu,  on  the  17th  of 
May  Ruggles  wrote  a  note  to  Senator  Sherman,  who  was  at 
Paris  visiting  the  fair,  inquiring  whether  Congress  would 
probably  consent  to  make  the  gold  dollar  conform  in  value  to 
the  gold  five-franc  piece.  On  account  of  the  nature  of  the 
senator's  reply  and  of  the  circumstances,  some  injudicious  sil- 
ver advocates  in  this  country  have  endeavored  to  cast  suspicion 
upon  him,  and  to  connect  in  some  way  his  presence  in  Paris 
with  a  conspiracy  to  force  the  gold  standard  on  the  nations  of 
Europe.  Those  who  have  made  this  charge,  and  were  in  public 
life  at  that  time,  were  in  entire  accord  with  Sherman  in  so 
far  as  they  held  any  opinion  at  all  on  the  subject.  Sherman's 
reply  so  well  represents  the  position  of  the  administration  and 
of  the  leaders  at  Washington  at  that  time  that  it  is  here  given 

in  full: 

"  HOTEL  JARDIN  DES  TUILERIES. 

"  May  18,  1867. 

"  My  dear  Sir:— Your  note  of  yesterday,  inquiring  whether  Con- 
gress would  probably,  in  future  coinage,  make  our  gold  coins  con- 
form in  value  to  the  gold  5-franc  piece,  has  been  received. 

"  There  has  been  so  little  discussion  in  Congress  upon  the  subject 
that  I  cannot  base  my  opinion  upon  anything  said  or  done  there.  The 
subject  has.  however,  excited  the  attention  of  several  important 
commercial  bodies  in  the  United  States,  and  the  time  is  now  so  fa- 
vorable that  I  feel  quite  sure  that  Congress  will  adopt  any  practical 
measure  that  will  secure  to  the  commercial  world  a  uniform  standard 
of  value  and  exchange.  The  only  question  will  be  how  this  can  be 
accomplished. 

"  The  treaty  of  December  23,  1805,  between  France,  Italy,  Bel- 
gium, and  Switzerland,  and  the  probable  acquiescence  in  that  treaty 
by  Prussia,  has  laid  the  foundation  for  such  a  standard.  If  Great. 
Britain  will  reduce  the  value  of  her  sovereign  twopence,  and  the 
United  States  will  reduce  the  value  of  her  dollar  something  over  three 
cents,  we  then  have  a  coinage  in  the  franc,  dollar,  and  sovereign 
easily  computed,  and  which  will  readily  pass  in  all  countries:  the  dol- 
lar as  five  francs,  and  the  sovereign  as  25  francs.  This  will  put  an 
end  to  the  loss  and  intricacies  of  exchange  and  discount. 

"  Our  gold  dollar  is  certainly  as  good  a  unit  of  value  as  the  franc, 
and  so  the  English  think  of  their  pound  sterling.  These  coins  are 


SHERMAN'S  LETTER  TO  RUGGLES  43 

now  exchangeable  only  at  considerable  loss,  and  this  exchange  is  a 
profit  only  to  brokers  and  bankers.  Surely,  each  commercial  nation 
should  be  willing  to  yield  a  little  to  secure  a  gold  coin  of  equal  value, 
weight,  and  diameter  from  whatever  mint  it  may  have  been  issued. 
As  the  gold  5-franc  piece  is  now  in  use  by  over  00,000,000  of  people 
of  several  different  nationalities,  and  is  of  convenient  form  and  size, 
it  may  well  be  adopted  by  other  nations  as  the  common  standard 
of  value,  leaving  to  each  nation  to  regulate  the  divisions  of  this  unit 
in  silver  coins  or  tokens.  If  this  is  done  France  will  surely  abandon 
the  impossible  effort  of  making  two  standards  of  value.  Gold  coins 
will  answer  all  the  purposes  of  European  commerce.  A  common 
gold  standard  will  regulate  silver  coinage,  of  which  the  United 
States  will  furnish  the  greater  part,  especially  for  the  Chinese  trade. 

"  I  have  thought  a  good  deal  of  how  the  object  you  propose  may 
be  most  readily  accomplished.  It  is  clear  that  the  United  States 
cannot  become  a  party  to  the  treaty  referred  to.  They  could  not 
agree  upon  the  silver  standard,  nor  could  we  limit  the  amount  of  our 
coinage  as  proposed  by  the  treaty.  The  United  States  is  so  large 
in  extent,  is  so  sparsely  populated,  and  the  price  of  labor  is  so  much 
higher  than  in  Europe,  that  we  require  more  currency  per  capita. 
We  now  produce  the  larger  part  of  the  gold  and  silver  of  the  world 
and  cannot  limit  our  coinage  except  by  the  wants  of  our  people  and 
the  demands  of  commerce. 

"Congress  alone  can  change  the  value  of  our  coin.  I  see  no 
object  in  negotiating  with  other  powers  on  the  subject.  As  coin  is 
not  now  in  general  circulation  with  us,  we  can  readily  fix  by  law 
the  size,  weight,  and  measure  of  future  issues.  It  is  not  worth 
while  to  negotiate  about  that  which  we  can  do  without  negotiation, 
and  we  do  not  wish  to  limit  ourselves  by  treaty  restrictions. 

"  In  England  many  persons  of  influence  and  different  Chambers 
of  Commerce  are  earnestly  in  favor  of  the  proposed  change  in  their 
coinage.  The  change  is  so  slight  with  them  that  an  enlightened 
self-interest  will  soon  induce  them  to  make  it.  especially  if  we  make 
the  greater  change  in  our  coinage.  We  will  have  some  difficulty 
in  adjusting  existing  contracts  writh  the  new  dollar;  but  as  con- 
tracts are  now  based  upon  the  fluctuating  value  of  paper  money, 
even  the  reduced  dollar  in  coin  will  be  of  more  purchasable  value 
than  our  currency. 

"  We  can  easily  adjust  the  reduction  with  the  public  creditors  in 
the  payment  or  conversion  of  their  securities,  while  private  creditors 
might  be  authorized  to  recover  upon  the  old  standard.  All  these 
are  matters  of  detail,  to  which  I  hope  the  commission  will  direct 
their  attention. 

"And  now,  my  dear  sir,  allow  me  to  say  in  conclusion  that  I  heart- 
ily sympathize  with  you  and  others  in  your  efforts  to  secure  the  adop- 
tion of  the  metrical  system  of  weights  and  measures.  The  ten- 
dency of  the  age  is  to  break  down  all  needless  restrictions  upon 
social  and  commercial  intercourse.  Nations  are  now  as  much  akin 
to  each  other  as  provinces  were  of  old.  Prejudices  disappear  by 
contact.  People  of  different  nations  learn  to  respect  each  other 
as  they  find  that  their  differences  are  the  effect  of  social  and  local 
custom,  not  founded  \ipon  good  reasons. 

"  I  trust  that  the  industrial  commission  will  enable  the  world  to 
compute  the  value  of  all  productions  by  the  same  standard,  to  meas- 


44  THE  CONFERENCE  OF  1867 

ure  by  the  same  yard  or  meter  and  weigh  by  the  same  scales. 
Such  a  result  would  be  of  greater  value  than  the  usual  employments 
of  diplomatists  and  statesmen. 

"  I  am  very  truly  yours, 

"JOHN  SHERMAN." 

The  terms  of  this  letter,  which  were  communicated  to  Sec- 
retary Seward,  were  entirely  approved  by  him  in  a  note  to 
Ruggles,  as  adequately  and  accurately  representing  the  views 
of 'the  administration.  Ruggles  showed  the  letter  to  Parieu, 
who  introduced  him  to  the  Minister  of  Foreign  Affairs,  and 
the  latter  quickly  secured  for  him  an  interview  with  the  Em- 
peror at  the  Tuileries.  Ruggles  afterwards  gave  Secretary 
Seward  an  account  of  this  interview,  from  which  it  appears 
that  Napoleon  secured  all  the  information  he  could  as  to  what 
the  United  States  might  do  and  what  Ruggles  thought  France 
could  do.  He  showed  the  Sherman  letter  to  the  Emperor,  and 
said  it  was  as  good  a  statement  of  the  opinion  of  Congress  as 
could  be  secured.  He  also  presented  it  to  the  international 
committee,  and  it  unquestionably  had  influence  on  the  course 
of  events,  but  only  a  cumulative  influence  in  developing  a 
plan  which  soon  became  the  plan  of  the  conference.  In  a 
letter  to  Seward  several  weeks  later  Ruggles  said :  "  It  is  but 
due  to  the  history  of  unification  of  money  to  state  that  the 
earnest  and  active  agitation  of  this  subject  in  a  practical  form 
on  the  part  of  the  United  States  exerted  its  full  share  of  in- 
fluence in  leading  the  government  of  France  to  adopt  the  de- 
cisive measure  of  inviting  in  diplomatic  form  an  authoritative 
conference  of  delegates,  duly  accredited  from  all  the  nations 
of  the  European  and  American  world  practically  accessible, 
to  meet  at  Paris  on  the  17th  of  June,  not  merely  for  an  ex- 
change of  views  or  a  discussion  of  general  principles,  but 
practically  to  seek  for  the  basis  of  ulterior  negotiations  be- 
tween the  nations." 

So  general  was  the  sentiment  for  uniform  coinage,  so 
shrewdly  had  Xapoleon  directed  the  favorable  current  of 


NAPOLEON'S  INVITATION  TO  THE  UNITED  STATES  45 

events,  and  so  easily  did  various  opinions  conform  to  his  pro- 
gramme, that  the  enthusiastic  representatives  of  other  nations 
overlooked  his  influence  and  his  purposes,  and  actually  thought 
that  they  were  themselves  the  mainspring  of  the  movement. 
The  United  States  Commissioner  may,  under  the  circum- 
stances, be  pardoned  for  seeking  to  give  to  his  government 
more  credit  than  it  actually  deserved  for  bringing  about  the 
conference,  the  prospects  of  which  seemed  so  bright.  Baron  de 
Hock,  of  Austria,  another  enthusiastic  advocate  of  uniform 
coinage  and  member  of  the  international  committee,  had  a 
similar  opinion  of  the  part  Austria  was  playing.  Even  had 
it  been  for  a  long  time  Napoleon's  intention  to  call  a  conference 
when  he  had  secured  all  the  additions  possible  to  the  Latin 
Union,  the  United  States  and  Austria  deserve  whatever  credit 
should  be  accorded  them  for  being,  for  reasons  of  their  own, 
distinctly  favorable  to  the  Emperor's  ambitious  project,  which, 
had  it  been  carried  out,  would  unquestionably  have  been  of 
the  greatest  benefit  to  mankind,  not  so  much  in  providing  a 
uniform  coinage  as  in  demonstrating  quickly  and  clearly  that 
the  simultaneous  adoption  of  an  exclusive  gold  standard  by  all 
Christendom  was  at  that  time  a  practical  impossibility. 

Early  in  May  France  sent  out  through  the  diplomatic 
channels  the  formal  invitations  to  the  conference.  Minister 
Berthemy  assured  Secretary  Seward  that  the  commissioners 
would  assemble  "  without  any  programme  arranged  in  antici- 
pation," a  form  of  expression  frequently  used  by  those  who 
have  been  quietly  making  the  most  elaborate  preparations.  The 
jester's  definition  of  diplomacy  as  the  art  of  skillful  lying  did 
not  lose  its  appropriateness  with  the  lapse  of  the  eighteenth 
century.  "  The  conference  proposed,"  wrote  Berthemy,  "  has 
not  otherwise  any  immediate  object  than  to  call  out  an  inter- 
change of  views  and  discussion  of  principles;  in  a  word,  to 
seek  for  the  basis  of  ulterior  negotiations."  His  government, 
he  said,  desired  to  be  informed  of  the  names  of  the  accredited 


46  THE  CONFERENCE  OF  1867 

delegates  as  soon  as  possible,  the  time  set  for  the  conference 
being  not  far  off.  It  is  obvious  that  the  calling  of  a  conference 
to  meet  in  four  weeks  would  naturally  have  the  tendency,  if  it 
had  not  the  object,  of  securing  as  delegates  to  it  a  large  num- 
ber of  the  representatives  of  the  governments  already  at  Paris 
as  members  of  the  international  committee,  which,  under  the 
guidance  of  the  Imperial  Commission,  had  the  subject  of  uni- 
form coinage,  according  to  French  ideas,  well  in  hand.  Sec- 
retary Seward  acknowledged  the  note  on  May  29,  and  informed 
Berthemy  that  Ruggles,  who  was  "  familiar  with  the  views  of 
this  government,"  had  been  specially  authorized  to  represent 
it  to  the  extent  and  in  the  spirit  of  the  invitation. 

The  international  committee  meanwhile  continued  its  work 
and  conveniently  completed  its  labors  on  the  very  day  that 
the  conference  met  by  adopting  the  following  propositions  as 
a  means  for  securing  international  uniformity  in  coinage : 

"  1.  An  identical  unity  in  the  issue  of  gold  coins  by  different 
nations. 

"  2.  The  desirability  of  having  such  coins  uniformly  nine-tenths 
fine. 

"  3.  The  desirability  of  having  for  each  government  pieces  of 
equal  value  with  pieces  in  other  states. 

"  4.  Recommending  the  coins  of  the  Latin  Union  as  the  basis 
of  a  general  monetary  system. 

"  5.  Recommending  the  five-franc  piece  as  a  unit. 

"  6.  Uniform  coins  of  each  country  to  be  legal  tender  in  all  the 
other  countries. 

"  7.  The  desirability  of  abolishing  the  double  standard  where  it 
exists. 

"  8.  The  desirability  of  using  the  decimal  system  everywhere. 

"  9.  The  desirability  of  agreeing  upon  common  measures  of 
control." 

Such  was  the  programme  laid  down  by  the  international 
committee  for  the  formal  conference,  some  of  the  leading  mem- 
bers of  which  were  members  of  the  international  committee. 
It  becomes  clear  enough,  when  events  are  thus  arranged  in  their 
proper  order,  that  the  adoption  of  the  principle  of  the  gold 
standard  and  the  extensive  demonetization  of  silver  which 
occurred  a  little  later  was  not  due  to  hidden  conspiracies  or 


THE  CONFERENCE  ASSEMBLES  47 

surreptitious  efforts  of  the  moneyed  classes,  but  was  an  eco- 
nomic movement,  open  and  above  board,  except  in  so  far  as  .N  a- 
poleon  was  using  it  for  his  own  ambition.  Bimetallic  France, 
eulogized  so  much  for  its  devotion  to  the  double  standard,  was 
mainly  instrumental  in  hastening  the  consummation  of  the 
movement,  which  was  principally  due  to  the  abundance  of  gold 
and  the  difficulty  of  keeping  appreciated  silver  in  concurrent 
circulation.  It  was  an  agitation  which  conspicuously  bore  the 
stamp  of  the  approved  school  of  political  economy. 

Kapolcon  could  not  have  been  otherwise  than  grati- 
fied at  the  response  of  the  nations  as  indicated  by  the  charac- 
ter and  standing  of  the  delegates  who  assembled  on  the  morn- 
ing of  the  17th  at  the  hotel  of  the  Department  of  Foreign  Af- 
fairs. There  have  been  many  congresses  of  a  politico-diplo- 
matic nature  attended  by  the  most  eminent  statesmen  of  the 
times,  but  there  has  seldom  been  an  international  conference 
made  up  of  so  many  men  of  the  highest  standing  in  science  and 
economics.  In  point  of  recognized  ability  no  monetary  con- 
ference has  surpassed  it.  Great  Britain  sent  Thomas  Graham, 
the  celebrated  chemist,  who,  since  1855,  had  been  Director  of 
the  Royal  Mint,  had  published  many  valuable  and  standard 
works  on  chemistry,  and  was  a  fellow  of  the  Royal  So- 
ciety. From  Bavaria  came  Friedrich  Wilhelm  von  Hermann, 
one  of  the  most  distinguished  economists  of  his  day.  His  great 
work,  "  Staatswirthschaftliche  Untersuchen  "  ("  Economic 
Researches  "),  appeared  in  1832,  and  three  years  later  he  was 
made  a  member  of  the  Royal  Bavarian  Academy  of  Science. 
From  that  time  until  his  death,  a  few  weeks  after  the  confer- 
ence, his  life  was  a  succession  of  active  and  energetic  services  in 
economic  lines.  In  1839  he  assumed  charge  of  the  Bavarian 
Bureau  of  Statistics,  which  acquired  a  wide  reputation;  in  1848 
he  sat  as  member  for  Munich  in  the  national  assembly  at 
Frankfort,  where  he  wras  instrumental  in  organizing  the  so- 
called  "  Great  German  party,"  whose  views  he  also  represented 


48  THE  CONFERENCE  OF  1867 

at  Vienna.  In  the  course  of  his  busy  life  he  published  many 
reviews  and  papers,  and  as  the  head  of  the  Bureau  of  Statistics 
published  a  yearly  report  of  high  value.  The  little  state  of 
Switzerland  was  represented  by  three  of  its  ablest  and  most 
distinguished  men,  Dr.  J.  Conrad  Kern,  Dr.  Alfred  Escher. 
and  Charles  Feer-Herzog.  Dr.  Kern,  who  was  then  Minister 
to  France,  early  in  life  became  prominent  in  Swiss  affairs,  and 
distinguished  for  his  legal  and  administrative  ability.  When, 
in  1838,  the  French  government  demanded  the  extradition  of 
Louis  Napoleon,  then  living  in  exile  in  Switzerland,  Dr.  Kern 
took  the  most  prominent  part  at  the  Diet  in  stirring  up  the 
Swiss  to  refuse  to  be  intimidated,  and  war  was  averted  only  by 
Napoleon  voluntarily  going  to  England.  In  1848,  Kern  took 
a  leading  part  in  the  preparation  of  the  federal  constitution, 
and  on  many  notable  occasions  in  Europe  he  was  the  repre- 
sentative of  his  country.  In  the  regeneration  period  of  Swit- 
zerland which  marked  the  beginning  of  a  new  era  in  the  his- 
tory of  the  country,  no  statesman  had  taken  a  more  conspicu- 
ous part  than  Dr.  Escher.  In  later  life  his  energies  were  chiefly 
devoted  to  educational  plans,  the  reorganization  of  church  pol- 
icy, and  the  promotion  of  banking  institutions  and  railway  en- 
terprises, the  notable  manner  in  which  engineering  difficulties 
in  the  Swiss  mountains  have  been  met,  as  in  the  St.  Gothard 
line,  with  its  fifty  tunnels,  being  a  monument  to  his  energy. 
In  1849  he  became  President  of  the  National  Council,  and  at 
the  time  of  the  conference  was  Director  of  the  Mint.  Charles 
Feer-Herzog,  a  member  of  the  National  Council,  had  been  ac- 
tive in  the  formation  of  the  Latin  Union,  and  was  destined  to 
have  an  influential  part  in  this  and  a  subsequent  conference. 
He  had  studied  and  written  much  upon  monetary  subjects,  and 
was  already  considered  a  leading  advocate  of  the  gold  standard. 
From  Russia  came  Moritz  Jacobi,  a  celebrated  scientist,  a 
Privy  Councillor,  and  a  member  of  the  Imperial  Academy  of 
Sciences  at  St.  Petersburg.  From  Greece,  Theodor  Delyan- 


THE  GOVERNMENTS  AND  THEIR  REPRESENTATIVES  49 

nis,  a  man  of  forty,  just  beginning  his  notable  career  as  Minis- 
ter to  France.  The  accomplishments  and  earnest  services  of 
Samuel  B.  Ruggles,  the  American  delegate,  have  already  been 
referred  to.  He  was  a  native  of  Connecticut,  a  graduate  of 
Yale,  and  for  many  years  had  been  a  leading  member  of  the 
New  York  bar,  having  made  commercial  matters  an  especial 
study. 

Austria  was  represented  by  Baron  de  Hock,  Privy  Coun- 
cillor, and  a  member  of  the  House  of  Lords;  Baden,  by  Baron 
Schweizer,  Minister  to  France,  and  Dietz,  Privy  Councillor 
and  Commissioner-General  to  the  Exposition ;  Bavaria,  in  addi- 
tion to  Hermann,  already  mentioned,  by  Haindl,  Director  of 
the  Mint ;  Belgium,  by  Senator  Fortampe,  Director  of  the  Bank 
of  Belgium,  and  by  Stas,  Commissioner  of  Coinage  and  mem- 
ber of  the  Royal  Academy;  Great  Britain,  in  addition  to 
Thomas  Graham,  by  Rivers  Wilson  of  the  Treasury  Depart- 
ment, and  better  known  later  as  the  Minister  of  Finance, 
chosen  by  the  Khedive  of  Egypt  in  1879,  when  England  was 
seeking  protection  for  the  Suez  bonds;  Italy,  by  Isaac  Artom, 
Councillor  of  the  Italian  legation  at  Paris,  and  by  F.  Giordono. 
Inspector  of  the  Royal  Corps  of  Mines  and  Commissioner  to 
the  Exposition;  Denmark,  by  Count  Hvitfeldt,  Minister  to 
France;  the  Netherlands,  by  A.  Vrolik,  formerly  Minister  of 
Finance,  and  the  author  of  a  work  on  "  The  Demonetization  of 
Gold,"  which  had  attracted  considerable  attention,  and  by 
President  Mees  of  the  Bank  of  the  Netherlands;  Portugal,  by 
Count  d'Avila,  Minister  to  Spain  and  Commissioner  to  the  Ex- 
position, and  by  Viscount  de  Villa  Major;  Prussia,  by  Mein- 
ecke,  Superior  Privy  Councillor  of  Finance,  and  Herzog, 
Councillor  of  the  Department  of  Commerce  and  Commissioner 
to  the  Exposition;  Sweden,  by  Wallenberg,  member  of  the  first 
chamber  of  the  Swedish  Diet  and  a  Director  of  the  Bank  of 
Stockholm;  Norway,  by  Dr.  O.  J.  Broch,  member  of  the 
Storthing  and  President  of  the  Commission  to  the  Exposition; 


50  THE  CONFERENCE  OF  1867 

Spain,  by  Count  Nava  de  Tajo  of  the  Department  of  Foreign 
Affairs;  Turkey,  by  Djemil  Pacha,  Ambassador  to  France; 
Wiirtemberg,  by  Baron  de  Soden,  Privy  Councillor  of  Lega- 
tion at  Paris. 

To  meet  this  array  of  influential  men,  France  had  chosen 
the  Marquis  de  Moustier,  Minister  of  Foreign  Affairs;  Es- 
quirou  de  Parieu,  Vice-President  of  the  Council  of  State; 
Lavenay,  President  of  the  Section  of  Finance  in  the  Council 
of  State;  Ilerbet,  Director  in  the  Department  of  Foreign  Af- 
fairs; and  Dutilleul,  Director  in  the  Department  of  Finance. 
The  invitations  to  the  conference  had  announced  that  the 
Marquis  de  Moustier  and  Rouher,  the  Minister  of  Finance, 
would  preside  jointly  over  the  assembly,  the  vice-presidency 
devolving  upon  Parieu,  so  that  the  conference  was  officered  by 
Napoleon  without  putting  it  to  the  trouble  of  choosing  for 
itself.  The  usual  courtesy  prevailing  in  such  bodies  would 
doubtless  have  resulted  in  the  choice  of  one  of  the  French  dele- 
gates to  the  presidency,  though  the  same  courtesy  might  have 
given  the  vice-presidency  to  some  other  country.  The  Mar- 
quis de  Moustier  was  present  at  the  opening  of  the  conference, 
but  its  direction  was  immediately  left  to  Parieu,  who  had 
probably  made  a  more  extended  study  of  the  subject  of  inter- 
national coinage  than  any  delegate  there,  had  been  Napoleon's 
chief  agent  in  effecting  the  Latin  Union,  and  in  getting  the 
international  programme  into  shape,  and  who,  in  the  chair, 
seconded  by  his  associates  on  the  floor,  was  entirely  competent, 
as  well  as  determined,  to  promote  the  interests  of  France  and 
the  desires  of  Napoleon.  He  was  a  member  of  the  Institute, 
and,  as  a  prolific  contributor  to  the  French  reviews  on  mone- 
tary subjects,  had  gained  a  wide  reputation. 

It  will  appear  that  the  Latin  Union,  considering  the  lead- 
ing part  taken  by  delegates  from  the  countries  composing  it, 
was  ably  represented.  The  French  and  Swiss  delegates  to- 
gether were  quite  sufficient  to  meet  any  criticism  <jr  handle 


PARIEU  PROCEEDS  TO  BUSINESS  51 

any  opposition  that  might  be  raised  to  the  system  of  the  Latin 
Union.  Six  of  the  nine  delegates  to  the  conference  of  1865 
were  in  this  conference,  one  of  them  in  the  chair,  and  none  on 
the  floor  had  greater  influence  than  Feer-Herzog.  A  majority 
of  the  other  delegates  were  either  members  of  the  international 
committee  or  commissioners  to  the  exposition.  The  French 
government  was  familiar  with  their  views. 

International  uniformity  in  the  world's  coinage  was  the 
great  object  in  the  minds  of  these  notable  representatives  of 
nearly  all  Christendom,  assembled  in  the  hotel  of  the  French 
Foreign  Department  on  this  June  morning.  They  little 
dreamed  of  the  great  economic  problem  soon  to  be  precipitated 
on  the  world  largely  by  their  deliberations.  In  opening  the 
conference  the  Marquis  de  Moustier  stated  that  the  approxi- 
mations which  late  commercial  reforms  had  wrought  between 
the  economic  interests  of  nations  ought  to  result  in  a  more 
earnest  appreciation  of  the  advantages  to  be  derived  from  the 
unification  of  coinages.  "  To  substitute  for  the  variety  of 
monetary  types  actually  in  use  metallic  coins  struck  in  ac- 
cordance with  uniform  regulations  and  placed  beyond  any  va- 
riations in  exchange  would  remove  one  of  the  most  serious  ob- 
stacles to  the  development  of  international  relations."  With- 
out further  generalities,  he  called  attention  to  the  Latin  Union 
and  to  the  suggestion  for  "  a  more  extended  association."  iSTo 
time,  he  said,  "  could  be  more  favorable  to  the  realization  of 
this  wish  than  that  of  the  Universal  Exposition;  the  govern- 
ment of  the  Emperor  hastened  to  avail  of  it."  After  other 
pleasant  words  concerning  the  delegates  and  the  happy  auspices 
under  which  they  assembled,  he  introduced  Parieu,  who  would, 
he  said,  "  cheerfully  direct  the  labors  of  the  conference." 

Parieu  at  once  proceeded  to  business  like  a  man  who  had 
previously  considered  and  knew  exactly  what  he  proposed  to 
do.  He  suggested  that  the  preparation  of  heads  of  inquiry  to 
serve  as  the  basis  of  deliberations  be  confided  to  a  sub-corn- 


52  THE  CONFERENCE  OP  1867 

mittee,  and  that  it  be  composed  of  seven  members  representing 
the  three  groups  into  which  the  states  were  divided  from  a 
monetary  point  of  view,  having  adopted  respectively  the  gold 
standard,  the  silver  standard,  and  the  double  standard.  The 
suggestion  was  seconded  by  Herbet,  also  of  France,  and  For- 
tamps,  of  Belgium.  Baron  de  Hock,  of  Austria,  and  Dr.  Kern, 
of  Switzerland,  suggested,  further,  that  it  would  be  convenient 
to  devolve  on  Parieu  and  Herbet  the  duty  of  selecting  the 
sub-committee,  and,  on  the  motion  of  the  Marquis  de  Moustier, 
this  action  was  taken.  It  was  perhaps  natural  that  France, 
having  called  the  conference,  should  take  the  lead  in  fixing 
a  basis  for  deliberations ;  at  any  rate,  Parieu  kept  his  hands  well 
on  the  progress  of  organization.  In  this,  it  may  be  noticed,  he 
was  assisted  by  delegates  from  his  own  government  and  those 
of  Belgium  and  Switzerland,  all  of  the  Latin  Union,  and  b\ 
the  representative  of  Austria,  which  was  peculiarly  close  to 
France  politically  at  that  time;  indeed,  Baron  de  Hock  had 
already  arranged  a  provisional  treaty  for  the  alliance  of  his 
government  with  the  states  of  the  Latin  Union. 

Parieu  and  Herbet  were  ready  with  the  sub-committee  in  a 
few  minutes.  To  represent  the  countries  with  a  gold  standard, 
they  chose  Graham,  of  England,  and  Count  d'Avila,  of  Portu- 
gal —  then  the  only  two  countries  in  Europe  having  the  gold 
standard;  to  represent  the  countries  with  a  silver  standard, 
Baron  de  Hock,  of  Austria,  and  Meinecke,  of  Prussia;  the 
countries  with  a  double  standard,  Jacobi,  of  Russia,  Rugglcs  of 
the  United  States,  and  Parieu,  of  France.  This  was  a  fair 
committee  to  all  appearances,  and,  perhaps,  it  was  in  fact. 
But  Parieu  had  had  facilities  for  knowing  in  advance  the  in- 
clinations of  the  majority  of  these  delegates.  Count  d'Avila 
and  Ruggles  had,  as  commissioners  to  the  exposition  and  as 
members  of  the  international  committee,  both  expressed  a  de- 
sire to  see  monetary  unity  effected  with  the  system  of  the  Latin 
Union  as  the  basis  and  gold  as  the  standard.  Austria,  as  has 


HEADS  OP  INQUIRY  53 

been  seen,  was  friendly.  It  was  generally  believed  that  Prus- 
sia had  been  considering  the  policy  of  joining  the  Latin  Union 
with  its  allied  states,  as  Senator  Sherman  had  remarked  in  his 
note  to  Kuggles.  So  there  is  reason  to  suppose  that  Parieu 
and  Ilerbet,  in  choosing  this  committee,  were  confident  that 
it  would  not  run  counter  to  the  hidden  wishes  of  France, 
whether  they  were  suspected  or  not. 

The  sub-committee  met  the  next  day  at  the  Council  of 
State,  and  the  day  after,  the  19th,  laid  its  proposed  heads  of 
inquiry  (questionnaire)  before  the  conference  in  printed  form. 
"  You  have  been  pleased,"  said  Parieu  in  opening  the  session, 
"  to  charge  me  with  the  preparation  of  a  detailed  programme 
of  your  labors,  with  the  collaboration  of  six  members  of  your 
conference,  representing  the  more  considerable  states  in  the 
diverse  groups  among  which  the  fundamental  money  systems 
of  the  world  are  distributed."  Regarding  the  spirit  in  which 
the  questions  had  been  drawn  up  he  said  that  the  mone- 
tary systems  in  use  among  the  various  nations  showed  ac- 
cidental varieties,  traceable  to  chance  and  former  isolation, 
but  having  also  some  relation  to  the  economic  condition 
of  the  countries  in  which  they  had  been  carried  into  prac- 
tice. In  this  situation,  it  had  seemed  to  the  committee 
that  monetary  unifications  could  be  realized  only  in  the  pro- 
portion in  which  these  economic  conditions  could  be  approxi- 
mated. "  To  discern,  on  the  one  side,  what  relates  to  the  cir- 
cumstances affecting  the  economic  history  of  nations,"  he  con- 
tinued, "  and,  on  the  other,  that  which  is  fundamental  in  mon- 
etary science,  is  now  our  main  endeavor;  for  if  individuals  and 
nations  separate  on  what  may  rest  on  arbitrary  will  or  caprice, 
they  easily  come  together  on  a  true  and  calm  consideration  of 
their  situations.  Notwithstanding  this  conviction,  we  have  not 
been  willing  that  all  the  doctrinal  and  scholastic  questions  per- 
taining to  monetary  science,  a  science  still  imperfect,  should  be 
textually  laid  down  in  the  programme  of  your  labors.  They 


54  THE  CONFERENCE  OF  1867 

may  present  themselves  incidentally,  and,  to  a  certain  extent, 
are  tacitly  included.  The  questions  we  have  the  honor  to 
submit  to  you  all  have  a  practical  character,  which  we  hope 
will  meet  your  approval,  as  circumscribing  difficulties  and  per- 
haps avoiding  some  idle  problems." 

These  were  the  questions: 

"  I.  By  what  means  is  it  most  easy  to  realize  monetary  unifica- 
tion, whether  by  the  creation  of  a  system  altogether  new,  independ- 
ent of  existing  systems  —  and  in  such  case  what  should  be  the  basis 
of  such  system  ?  —  or  by  the  mutual  co-operation  of  existing  sys- 
tems, taking  into  account  the  scientific  advantages  of  certain  types 
and  the  number  of  the  populations  which  already  have  adopted 
them?  In  this  case,  what  monetary  system  should  be  principally 
taken  into  consideration,  reserving  the  changes  of  which  it  might 
be  susceptible  for  making  it  perfect? 

"  II.  Is  there  a  possibility  of  establishing  at  this  time  identities 
or  partial  coincidences  of  monetary  types  on  a  wide  scale,  on  the 
basis  and  with  the  condition  of  the  adoption  of  the  silver  standard 
exclusively? 

"  III.  Is  there,  on  the  contrary,  a  possibility  of  attaining  this  re- 
sult on  the  basis  and  witn  the  condition  of  the  gold  standard  ex- 
clusively ? 

"  IV.  What  of  the  like  result  in  proceeding  on  the  ba.sis  and  with 
the  condition  of  the  adoption  of  the  double  standard,  with  the  es- 
tablishment of  an  identity  of  relations  in  all  countries  between  the 
Talue  of  gold  and  the  value  of  silver? 

"  V.  In  case  of  a  negative  on  the  three  preceding  questions, 
would  it  be  possible  and  beneficial  to  establish  identities  or  partial 
coincidences  of  monetary  types  on  an  extended  scale  on  the  basis  of 
silver  coins,  leaving  each  state  at  liberty  to  simultaneously  regu- 
late the  standard  of  gold? 

"  VI.  Would  it  be  more  possible  and  more  beneficial  to  establish 
identities  or  partial  coincidences  of  gold  coins,  leaving  each  state 
to  regulate  the  standard  of  silver? 

"  VII.  On  the  hypothesis  of  the  affirmative  solution  of  one  of  the 
two  preceding  questions,  and  following  the  distinctions  which  that 
alternative  imports,  would  the  advantage  of  internationality,  which 
coins  of  the  metal  taken  as  the  common  standard  would  require, 
be  a  sufficient  guarantee  for  their  being  kept  in  circulation  in  each 
state,  or  would  it  be  necessary  beyond  that  to  stipulate  either  for 
a  certain  limit  in  the  relation  between  the  value  of  gold  and  that  of 
silver,  or  for  the  case  where  the  international  coins  would  run  the 
risk  of  being  completely  expelled  from  circulation  in  some  of  the 
contracting  states? 

"  VIII.  Is  it  necessary  to  the  success  of  monetary  unification  to 
constitute  at  this  time  a  unity  everywhere  identical  for  metallic 
composition,  weight,  and  denomination;  and  in  that  case  upon  what 
basis? 

"  IX.  Would  it  be  of  advantage,  in  case  gold  should  be  adopted 
as  the  international  metal,  that  the  types  of  that  money,  determined 
by  the  monetary  convention  of  the  23d  of  December,  1805,  to  promote 


SHAPED  FOR  NAPOLEON'S  AMBITION  55 

unification  and  consequent  reciprocity,  should  be  completed  by  new 
types;  for  example,  by  coins  of  fifteen  francs  and  of  twenty-five 
francs?  In  this  case,  what  should  be  their  dimensions? 

"  X.  Would  there  be  an  advantage,  under  certain  hypotheses  — 
for  example,  in  case  of  the  affirmative  on  questions  III.  or  VI.  — 
to  regulate  by  common  obligations  certain  points  relating  to  silver 
coins  or  base  coin,  either  in  regard  to  their  composition  and  standard 
or  their  limits  of  admission  in  payments,  or  to  the  quota  of  issue  of 
each  ? 

"  XI.  Is  it  practicable  to  define  precisely  the  means  of  control 
which  would  be  established  for  securing  exactness  in  the  striking 
of  the  common  types  of  international  money? 

"  XII.  Aside  from  immediate  practical  possibilities,  the  object  of 
the  preceding  questions,  could  any  ulterior  solutions  be  attained  by 
doctrinal  decisions,  and  on  grounds  of  principle,  with  a  view  to  in- 
crease in  the  future  the  approximations  already  effected  in  the  past 
two  years  in  Europe,  or  that  could  be  immediately  realized  in  this 
monetary  matter?  " 

The  guiding  genius  in  the  committee  which  arranged  these 
questions,  adopted  in  conference  without  debate,  was  Parieu's. 
He  drafted  them  himself,  and  only  a  few  modifications  were 
made  in  the  committee.  A  man  of  deep  research  in  monetary 
matters,  and  especially  in  this  phase  of  it,  and  acting  for  the 
government  at  whose  invitation  they  had  assembled,  the  others 
of  the  committee  naturally  yielded  the  control  of  preliminaries 
into  his  hands.  With  politeness  and  skill  he  shaped  them  as 
favorably  as  he  could  for  the  Latin  Union  and  for  Xapoleon's 
ambition.  Having  found  that  the  limits  of  accession  to  the 
Union  by  other  countries  had  been  reached,  his  object  was  to 
suggest  the  easiest  means  for  arriving  in  conference  at  the  co- 
ordination of  other  systems  with  the  French  on  any  metallic 
standard  so  long  as  France  was  the  centre  of  the  unification. 

The  first  question  was  well  designed  for  this  object.  It 
was  no  general  inquiry  for  the  settlement  of  a  fundamental 
principle  of  monetary  science.  The  character  of  the  standard 
of  value  was  not  suggested  in  it,  but  was  discreetly  left  till 
later,  for  if  the  gold  standard  were  adopted  at  first  the  English 
system  might  present  stronger  claims  as  a  basis  for  interna- 
tional unity.  It  was  a  thoroughly  practical  question.  To 
secure  monetary  unification,  should  a  new  system  be  created? 
Such  an  attempt,  it  was  well  known,  would  be  beset  with 


56  THE  CONFERENCE  OF  1867 

serious,  if  not  insurmountable,  difficulties.  It  would  require 
every  state  to  change  its  system  to  something  altogether  un- 
tried, to  discard  that  around  which  popular  traditions  clustered 
and  into  which  the  habits  of  the  common  people  were  woven. 
The  alternative  was,  as  the  question  stated,  a  co-ordination  of 
existing  systems,  "  taking  into  account  the  scientific  advantages 
of  certain  types  and  the  number  of  the  populations  "  which 
had  already  adopted  them.  The  scientific  advantage  of  the 
French  system  was  its  association  with  the  metric  system, 
which  had  won  favorable  consideration  in  every  civilized  coun- 
try, and  the  fact  that  it  was  based  on  the  decimal  principle; 
but  its  principal  advantage  was  that  it  had  been  adopted  by  a 
population  of  about  70,000,000  in  Europe.  The  logical,  if 
not  the  necessary,  answer  to  this  first  question,  therefore,  was 
that  the  system  of  the  Latin  Union  "  should  be  principally 
taken  into  consideration."  With  that  settled  the  remainder 
of  the  course  was  clear.  While  a  certain  implied  endorse- 
ment might  thus  be  given  to  the  double  standard,  a  single  gold 
standard  could  be  adopted  without  at  all  interfering  with  the 
pre-eminence  of  the  French  system.  Whatever,  in  theory, 
France  might  be  compelled  to  yield  on  this  score  would  not 
be  an  actual  sacrifice,  her  metallic  circulation  being  almost  en- 
tirely of  gold.  The  cleverness  with  which  Parieu  maintained 
this  position  will  appear  as  the  discussion  is  followed. 

At  the  very  beginning  an  incident  occurred  showing  how 
closely  the  French  delegates  were  watching  affairs.  For- 
tamps,  of  Belgium,  who  was  not  a  member  of  the  sub-commit- 
tee, expressed  a  wish  to  have  the  question  of  the  standard  of 
value  settled  first.  "  It  is,"  he  said,  "  an  initiative  point  which 
it  is  convenient  to  settle  at  once  in  order  to  base  the  delibera 
tions  on  foundations  as  precise  as  possible."  As  a  partisan 
of  the  gold  standard,  he  was  more  earnest,  even,  than  he  had 
been  two  years  before  in  the  conference  of  the  Latin  Union, 
and  he  was  impatient  to  take  up  arms  for  gold  on  a  wider  field 


A  NEW  OR  AN  EXISTING  SYSTEM  67 

and  at  once.  Herbet,  of  France,  was  immediately  upon  his 
feet  to  remark  that  by  reason  of  the  importance  of  the  ques- 
tion of  the  standard  there  would  be  inconveniences  in  bringing 
it  at  once  under  discussion.  He  inferred  in  one  of  his  state- 
ments that  the  Belgian  delegates  might  not  have  a  sufficient 
understanding  of  what  their  government  desired  on  this  point, 
and  made  the  further  excuse  that  the  Spanish  delegate,  who 
would  bring  a  large  experience  to  bear  upon  the  subject,  had 
not  yet  arrived.  Parieu  followed  with  an  explanation  that 
the  first  question  had  been  framed  to  embrace  an  order  of  ideas 
much  more  extensive  than  the  question  of  standard,  which 
could  as  well  be  taken  up  after  the  conference  had  determined 
whether  a  new  system  was  desired  or  a  co-ordination  of  exist- 
ing systems  with  some  one  system  as  a  basis. 

Notwithstanding  the  precautions  of  the  French  delegates, 
the  problem  of  the  standard  cropped  out,  though  not  in  a 
dangerous  manner,  in  the  arguments  over  the  first  question. 
Count  d'Avila,  of  Portugal,  considering  the  difficulties  in  the 
way  of  an  entirely  new  system  insurmountable,  strongly  ad- 
vocated the  second  alternative  and  gratified  the  French  dele- 
gates by  holding  that  the  system  of  the  Latin  Union  should  be 
taken  into  especial  consideration  as  a  basis  for  approximations. 
That  done,  he  declared  himself  ready  to  vote  for  the  gold  stand- 
ard, the  reduction  of  the  pound  sterling  to  25  francs,  the  re- 
duction of  the  American  dollar  to  5  francs,  and  the  adoption  of 
the  gold  coin  of  5  francs  as  the  standard  unit.  This  was  prac- 
tically the  programme  laid  down  by  the  international  commit- 
tee, discussed  in  the  French  reviews,  and  generally  received 
with  favor.  Xo  other  practical  plan  was  in  the  minds  of  the  del- 
egates, apparently,  for  none  other  seemed  capable  of  bringing 
England,  France,  and  thfe  United  States  into  an  agreement. 
It  would  require  the  fineness  of  the  English  and  Portuguese 
gold  coins  to  be  reduced  from  eleven-twelfths  to  nine-tenths, 
and  the  value  of  the.  American  dollar  to  be  reduced  about  3 


58  THE  CONFERENCE  OF  18C7 

per  cent.  Opinion  among  the  commercial  bodies  in  England 
was  favorable  to  the  project,  and  the  opinion  of  the  United 
States,  so  far  as  there  could  be  any  under  a  paper  regime,  was 
well  expressed  in  the  letter  of  Senator  Sherman. 

Baron  de  Hock,  of  Austria,  shared  in  the  opinion  of  Count 
d'Avila  as  to  the  impossibility  of  bringing  about  an  entirely 
new  system  and  completely  breaking  up  inveterate  habits. 
He  thought  also  the  best  basis  for  the  mutual  co-ordination 
of  types  was  the  system  of  the  Latin  Union,  provided  it  under- 
went some  modifications  and  the  new  system  rested  on  the  gold 
basis  exclusively.  "  This  metal,"  he  said,  in  speaking  of  gold, 
"  which  has  spread  in  such  considerable  amounts  through  the 
European  market  during  the  last  twenty  years,  would  be  the 
most  convenient  agent  for  a  universal  monetary  circulation  " 
—  the  argument  of  plentifulness  again. 

Banker  Mees,  of  the  Netherlands,  said  he  would  have  pre- 
ferred an  entirely  new  system  if  the  unification  of  coinage 
could  be  immediately  realized  upon  it,  as  it  would  avoid  all 
national  susceptibilities.  But  he  considered  that  actual  and 
practical  results  required  the  adoption  of  an  existing  system. 
Feer-Herzog,  of  Switzerland,  argued  that  the  system  of  the 
Latin  Union  would  best  assist  the  equations  of  the  English 
sovereign  and  the  American  dollar.  His  view  was  endorsed 
by  Jacobi,  of  Russia.  Dr.  Broch,  of  Norway,  favored  the  sys- 
tem of  the  union  as  a  basis  also,  but  said  that  as  Sweden  and 
Norway  had  a  silver  standard,  and  their  commerce  was  princi- 
pally with  Germany,  especially  Hamburg,  their  adhesion  to  a 
monetary  union  would  depend  upon  the  action  of  the  states 
of  northern  Germany.  This  made  the  position  of  those  states 
important. 

Meinecke,  the  Prussian  delegate;  spoke  for  them.  He  con- 
sidered it  of  prime  necessity  to  adopt  as  the  base  of  the  new  sys- 
tem one  already  recognized  and  reduced  to  practice.  He  did 
not  pretend,  he  said,  to  ask  the  sympathies  of  the  conference 


ATTITUDE  OF  PRUSSIA,  ENGLAND,  AND  THE  UNITED  STATES         CQ 

in  favor  of  the  Prussian  monetary  system,  for  lie  did  not  believe 
that  the  standard  of  gold  could  be  replaced  in  the  countries 
which  had  adopted  it  by  the  standard  of  silver  in  force  in 
Prussia.  His  country,  he  thought,  was  content  with  its  stand- 
ard, and  there  was  no  urgent  necessity  for  a  change  so  radical 
as  the  adoption  of  the  gold  standard,  an  operation  which  in 
any  case  would  be  difficult,  but  his  government  would,  never- 
theless, study  with  care  the  best  means  of  joining  a  monetary 
union,  though  it  would  be  necessary  to  have  the  concurrence 
of  its  Northern  confederates,  and  also  of  the  Southern  states, 
co-signers  in  the  treaty  of  1857.  With  these  reservations,  he 
was  ready  to  take  part  in  the  discussion  and  vote.  It  was  evi- 
dent that  the  Prussian  delegate  had  received  instructions  not 
to  commit  himself  too  far  until  he  saw  the  outcome  of  the  dis- 
cussion. It  is  doubtful  if  he  could  have  imagined  that  in  four 
years  the  silver  standard,  with  which,  he  said,  Prussia  was 
content,  would  be  discarded  for  gold,  that  his  king  would  be 
declared  the  Emperor  of  united  Germany  in  the  palace  at 
Versailles,  and  that  Xapoleon,  who  had  just  been  riding 
through  the  streets  of  Paris  with  King  William,  would  be  a 
refugee  from  that  France  which  was  then  celebrating  the  glory 
of  his  reign. 

The  English  delegates  said  very  little  upon  the  subject. 
In  reply  to  a  statement  made  by  Feer-Herzog  that  sovereigns 
actually  in  circulation  might  be  kept  so  because  of  the  trifling 
difference  separating  them  from  a  25-franc  piece,  Graham  said 
that,  even  if  it  were  true  that  the  difference  in  value  was  almost 
comprised  within  the  limits  of  tolerance,  it  would  be  equally 
true  that  his  government  would  make  it  a  point  of  honor  not  to 
avail  itself  of  these  limits.  He  feared  such  a  change  might 
lead  to  the  abandonment  of  the  sovereign,  and  he  considered 
the  immediate  adoption  of  the  French  system  preferable. 

The  American  delegate  explained  his  position  at  con- 
siderable length,  and  it  is  beyond  question  that  he  faithfully 


60  THE  CONFERENCE  OF  1867 

represented  the  opinion  of  the  leading  authorities  of  his  coun- 
try at  that  time.  It  would  be  as  impossible,  he  said,  to  abolish 
the  expression  of  the  dollar  in  the  United  States  as  that  of  the 
sovereign  in  England.  His  plan  would  be  to  retain  both  by 
reducing  their  intrinsic  value.  For  the  sovereign  it  would  be 
a  reduction  of  only  20  centimes;  for  the  dollar,  on  the  other 
hand,  the  reduction  would  be  3^  per  cent,  of  its  value.  He  as- 
sured the  conference  that  his  government  was  ready  to  make 
this  sacrifice  in  view  of  monetary  unification,  such  being  the 
opinion  of  the  American  people,  and  after  the  following  winter 
a  general  reminting  of  coin  might  commence.  He  argued 
strongly  that  all  reminting  should  be  done  then  or  never,  for 
gold  coinage  was  rapidly  increasing  everywhere,  and,  if  con- 
tinued, the  time  would  come  when  reminting  would  be  impossi- 
ble because  of  the  expense.  The  United  States,  from  1793  to 
1849,  had  actually  coined  but  $85,000,000  of  gold;  in  1850 
and  1851  alone,  $94,000,000;  and  from  1851  to  1866,  they 
had  coined  $665,000,000.  During  this  last  period  of  fifteen 
years  France  had  coined  about  $995,000,000  of  gold,  and  Eng- 
land $450,000,000.  He  considered  it  quite  possible  that  in 
the  United  States  in  the  fifteen  years  to  follow  the  gold 
coinage  might  reach  five  milliards  of  francs.1  Obviously,  then, 
the  United  States  preferred  to  reduce  their  unit  at  once.  A 
few  words,  he  said,  reducing  the  weight  of  the  gold  dollar 
would  change  the  whole  monetary  system;  but  his  government 
expected  that  France,  on  her  side,  would  coin  gold  pieces  of 
25  francs.  In  that  case  he  thought  monetary  unification  would 
assume  a  practical  form. 

Parieu  called  special  attention  to  the  favorable  attitude  of 
the  United  States,  and  said  in  regard  to  the  wish  expressed  for 
the  creation  of  a  25-franc  piece  in  France  that  the  matter  had 
been  given  a  place  in  the  inquiry  and  would  be  discussed  later. 
Graham,  the  English  delegate,  observed  that  as  there  was  an 

i  From  18H8  to  1883  the  total  prold  coinage  of  the  United  States 
amounted  to  $032,720,112,  or  about  three  milliards  of  francs. 


THE  ECONOMICALLY  IDEAL  PLAN  61 

identity  of  coin  between  Canada  and  the  United  States,  if  the 
latter  should  approximate  to  the  French  monetary  system, 
Canada  would,  of  necessity,  follow  the  example. 

It  may  at  first  seem  remarkable  that  the  only  delegate  rais- 
ing objections  to  the  adoption  of  the  system  of  the  Latin  Union 
as  a  basis  for  unification  was  Stas,  of  Belgium,  a  party  to  the 
union.  But  political  and  financial  leaders  in  that  country 
had  quite  generally  followed  the  opinion  of  a  certain  school  of 
economists,  important  because  of  the  scientific  authority  of  its 
adepts,  which  would  admit  no  other  monetary  unity  than  a 
metric  unity  in  round  numbers,  and  which  had  proposed  to  take 
for  the  unit  a  weight  of  five  grams  of  gold  of  nine-tenths  fine- 
ness. It  was  the  economically  ideal  form  of  monetary  unity, 
and  had  been  urged  with  great  ability  in  the  reviews.  Stas 
was  a  believer  in  it,  and  so  preferred  the  establishment  of  an 
entirely  new  system,  essentially  French,  but  based  on  a  differ- 
ent metric  unit,  thereby,  as  he  held,  settling  principles  rather 
than  expedients  in  practice.  To  follow  the  latter  course,  he 
said,  would  be  to  leave  traces  in  snow,  not  to  engrave  footprints 
in  rock  —  it  would  not  create  anything  durable ;  on  the 
contrary,  it  would  prepare  difficulties,  for  future  monetary 
unification,  he  held,  would  only  be  reached  by  first  laying  down 
an  immovable  basis.  In  his  opinion  the  creation  of  a  system 
based  on  a  unit  of  gold  of  5  or  10  grams  would  offer  the  im- 
mense advantage  of  having  it  more  readily  accepted  by  all 
nations,  as  it  would  avoid  all  national  susceptibilities;  and, 
while  the  adoption  of  the  new  unit  would  require  the  general 
reminting  of  all  coinage,  it  would  bring  with  it  a  definite  sys- 
tem, sanctioned  by  science.  Stas  designated  certain  difficul- 
ties in  the  effort  to  approximate  to  the  existing  French  coinage. 
The  coin  of  25  francs,  for  example,  would  be  inconvenient  in 
divisions  —  the  half  would  be  12  francs  50  centimes,  a 
number  already  fractional.  In  his  view,  there  did  not  really 
exist  pieces  of  20  francs,  10  or  5  francs,  seeing  that  no  piece  of 


62  THE  CONFERENCE  OP  1867 

20  francs  was  exactly  the  155th  part  of  a  kilogramme.  Mathe- 
matically speaking,  the  kilogramme  could  not  be  divided  into 
155  equal  portions,  and,  with  stronger  reasons,  Stas  held  that  it 
could  not  be  divided  in  the  order  of  material  facts;  but  it  would 
not  be  so  with  a  perfect  metric  unity  of  gold,  and  he,  therefore, 
concluded  that  only  by  a  new  system  could  there  be  a  reason- 
able hope  of  the  establishment  of  a  common  measure  of  values 
in  the  various  countries.  He  urged  that  he  spoke  disinter- 
estedly as  a  representative  of  one  of  the  governments,  co- 
signers of  the  agreement  of  1865. 

From  a  purely  scientific  point  of  view,  Stas  and  his  school 
of  economists  were  undoubtedly  right,  and  the  conference  was 
well  aware  of  it.  But  it  was  practically  impossible.  Any 
other  system  than  the  French  was  exactly  what  Napoleon  did 
not  desire  as  a  basis ;  and  if  there  was  any  possibility  of  securing 
the  co-operation  of  England,  it  must  have  vanished  under  the 
requirement  of  doing  away  with  its  distinctive  coins,  while 
Ruggles  was  maintaining  that  it  would  be  impossible  to  abolish 
the  expression  of  the  dollar  in  this  country.  The  impossi- 
bility of  the  theoretically  proper  has  often  been  demonstrated 
in  monetary  conferences,  all  of  which,  when  called  to  establish 
a  condition  based  on  theory,  have  failed. 

As  soon  as  Stas  had  taken  his  seat,  Parieu  asked  signifi- 
cantly if  he  had  spoken  in  the  name  of  Belgium,  or  had  simply 
expressed  his  own  opinion.  Fortamps  replied  for  Stas  that 
the  opinion  the  latter  had  given  was  shared  by  the  ministers  of 
finance  in  Belgium,  but  that  his  government  would  not,  of 
course,  refuse  to  acquiesce  in  other  propositions  adopted  by  the 
conference.  There  was,  therefore,  no  serious  trouble  for 
France  to  fear  from  that  quarter.  Feer-Herzog,  undertaking 
to  meet  the  scientific  objections  raised  by  Stas,  said  that  even 
the  metric  system  could  not  claim  scrupulous  respect  for  its 
smaller  parts,  the  basic  meter  not  possessing  that  sure  scientific 
quantity  of  length  which  constituted  its  definition — the  terres- 


SYSTEM  OP  THE  LATIN  UNION  ADOPTED  63 

trial  spheroid,  according  to  one  of  the  dimensions  of  which 
the  meter  was  calculated,  presenting  irregularities  making  the 
absolute  mathematical  perfection  Stas  sought  for  impossible. 
Nevertheless,  the  system  presented  great  advantages  over  any 
other,  and  thus  it  was  not  indispensable  to  the  goodness  of  coin 
that  it  should  be  metrically  proportioned. 

At  the  conclusion  of  this  discussion,  of  which  these  were 
the  main  features,  Parieu  called  for  a  vote  on  the  propositions 
in  the  first  question,  each  state  having  one  vote.  The  proposi- 
tion for  the  adoption  of  a  new  system  was  rejected  without  a 
dissenting  voice;  the  Belgian  delegates,  finding  themselves 
alone,  remained  quiet.  The  policy  of  the  mutual  co-ordination 
of  existing  systems  was  unanimously  adopted.  Then  Parieu  put 
the  question  as  to  what  existing  system  should  be  principally 
taken  into  consideration,  it  being  understood  that  the  vote  did 
not  determine  the  matter  of  the  metallic  standard,  and  the  con- 
ference, without  any  dissent,  expressed  itself  in  favor  of  the 
Latin  Union.  The  only  reservations  came  from  the  German 
states,  which  were  bound  by  the  treaty  of  1857,  and  must 
in  final  settlements  act  together.  So  far,  therefore,  every- 
thing had  progressed  favorably  for  Xapoleon  and  his  am- 
bition to  spread  the  Latin  influence  permanently  over  the 
money  of  the  world. 

When  the  conference  met  the  next  day,  it  at  once  took  up 
the  questions  from  II.  to  VII.  inclusive,  squarely  raising  the 
subject  of  the  metallic  standard.  They  in  effect  asked  whether 
it  were  possible  to  constitute  identities  or  partial  coincidences 
of  monetary  types  on  the  silver  standard  exclusively,  or  on  the 
gold  standard  exclusively,  or  on  the  double  standard;  and,  in 
case  of  a  negative  in  each  instance,  whether  such  identities  or 
partial  coincidences  could  be  established  on  the  basis  of  silver 
coins,  leaving  each  state  at  liberty  simultaneously  to  regulate 
the  gold  standard,  or,  on  the  basis  of  gold  coins,  leaving  each 
state  at  libertv  to  regulate  the  silver  standard. 


64  THE  CONFERENCE  OF  1867 

Only  one  delegate,  Mees  of  Holland,  raised  objections  to 
the  general  adoption  of  the  gold  standard.  While  avowing 
himself  a  partisan  of  a  single  standard  for  each  particular 
state,  he  thought  that  serious  inconvenience  would  arise  if  all 
the  nations  in  Europe  adopted  the  same  standard,  either  silver 
or  gold,  for,  in  his  opinion,  it  would  exclude  entirely  from 
European  circulation  one  of  the  two  metals.  Representing  a 
state  whose  currency  rested  on  silver,  he  did  not  maintain  that 
it  would  be  properly  adopted  in  preference  to  gold;  he  simply 
did  not  admit  either  the  gold  or  silver  standard  exclusively, 
and  he  would  not,  he  said,  advocate  the  double  standard  unless 
a  universal  monetary  union  was  formed,  an  hypothesis  the 
realization  of  which  was  too  remote  to  be  considered. 

The  delegates  from  Switzerland  and  Belgium,  countries 
having  the  double  standard,  and  those  of  Austria,  Prussia, 
Sweden,  and  Norway,  having  the  silver  standard,  all  advocated 
gold.  Feer-Herzog  said  that  gold  was  the  only  practical  basis 
for  a  monetary  union.  As  to  the  fear  expressed  by  Mees  of 
the  total  disappearance  of  silver,  in  case  of  the  adoption  of  the 
gold  standard  exclusively,  he  claimed  that  it  was  not  founded 
on  an  exact  appreciation  of  the  situation.  "  The  world  is 
divided  in  its  monetary  relation,"  he  said,  "  into  two  consider- 
able and  very  distinct  groups;  on  the  one  side,  the  Western 
states,  where  gold  tends  more  and  more  to  prevail ;  on  the  other, 
the  countries  of  the  extreme  East,  where  silver  continues  to 
predominate.  Commerce,  which  develops  itself  more  and 
more  between  Europe  and  those  far-off  countries,  cannot  fail 
to  keep  up  on  this  side  a  considerable  circulation  of  silver." 
The  monetary  system  of  Switzerland,  he  said,  was  necessarily 
subordinate  to  that  of  France  and  other  neighboring  states, 
but  all  the  sympathies  of  the  Swiss  government  were  for  the 
gold  standard.  Baron  de  Hock,  of  Austria,  likened  the  double 
standard  to  opium  —  it  might  be  a  useful  medicine  in  some 
cases,  but,  if  used  every  day,  it  would  become  a  poison;  it 


ALL  BUT  HOLLAND  FOR  GOLD  65 

might  be  useful  in  financial  crises  but  it  would  be  inconven- 
ient for  general  use  on  account  of  the  daily  changes  in  the 
relative  value  of  the  two  metals.  Its  influence  was  evil  on  the 
Bourse,  he  held,  the  fall  in  stocks  always  being  greater  in 
countries  of  the  double  standard  than  in  those  where  a  single 
standard  prevailed.  Fortamps  said  that  the  Belgian  govern- 
ment, having  long  been  a  partisan  of  the  silver  standard,  had, 
in  view  of  the  effects  which  had  taken  place  in  the  monetary 
circulation  of  Europe,  come  to  consider  the  gold  standard  as 
the  only  one  that  should  be  adopted.  The  Prussian  delegate 
said  lie  should  vote  for  the  principle  of  the  gold  standard,  but 
added  that  for  countries  like  Prussia,  having  the  silver  stand- 
ard, it  would  be  necessary  to  prepare  the  change  from  one 
standard  to  the  other  by  measures  of  transition.  The  Swedish 
delegate  reviewed  the  conditions  of  the  currency  in  his  coun- 
try, on  a  silver  basis,  and  declared  that  for  international  pur- 
poses the  gold  standard  appeared  to  him  necessary.  Dr. 
Broch,  of  Norway,  was  even  more  radical,  asserting  that  gold 
should  not  only  be  the  sole  standard,  but  that  free  coinage  of 
silver  should  be  prohibited  in  countries  where  that  standard 
prevailed.  He  followed  this  with  a  remark  which  was  certainly 
prophetic  :  "  In  some  countries,"  he  said,  "  any  person  can 
take  bar  silver  to  the  mint  and  have  it  coined  at  a  small  cost. 
Individuals  should  be  deprived  of  this  right;  the  state  alone 
should  have  the  privilege  of  coinage  and  ought  to  limit  the 
quantity  of  coin  issued  to  so  much  per  head.  This  provision 
should  be  made  now  for  the  5  francs  of  the  convention  of 
1865.  If  such  a  precaution  is  not  taken  and  a  sudden  revo- 
lution renders  silver  more  abundant  than  gold  in  Europe,  the 
same  difficulties  that  now  exist  from  the  expulsion  of  silver 
would  then  happen  inversely.  So  private  persons  ought  only 
to  be  allowed  to  coin  their  gold." 

In  stating  the  position  of  the  United  States,  Ruggles  said 
that  the  double  standard  did  not  practically  exist  there.  "  The 
5 


66  THE  CONFERENCE  OF  1867 

original  act  of  Congress,"  he  explained,  "  which  was  passed  at 
a  time  when  we  were  less  enlightened  than  to-day,  either  by 
study  or  experience,  sought  to  establish  a  double  standard  by 
giving  to  gold  coin  and  silver  coin  equal  legal  currency  in  pay- 
ments, whatever  might  be  the  amount  of  the  debt.  In  1853, 
in  view  of  the  considerable  change  which  had  been  experienced 
in  the  respective  value  of  the  two  metals,  and  which  was  then 
in  the  way  of  increase,  the  double  standard  was  practically 
abolished  by  the  reduction  of  about  7  per  cent,  in  the  weight 
of  the  fractional  pieces  of  the  silver  dollar  and  by  the  declara- 
tion that  all  the  divisional  coins  which  should  subsequently 
be  struck  should  be  a  legal  tender  only  for  payments  of  debts 
not  exceeding  $5.  It  is  true  that  the  silver  dollar  is  still  re- 
tained as  lawful  money  for  debts  of  any  amount;  but  of  a  total 
silver  coinage  of  $136,351,512,  only  $4,366,340  are  in  dollars, 
while  $131,985,472  consist  of  subdivisions  of  the  dollar.  Al- 
most all  the  divisional  pieces  which  had  been  coined  before  the 
passage  of  the  law  of  1853  have  disappeared,  in  obedience  to 
the  fundamental  and  inexorable  law  of  demand  and  supply, 
which  sets  at  naught  all  attempts  made  to  fix  by  legislation  the 
relative  values  of  the  two  metals.  The  legislators  and  the  people 
of  the  United  States  have  sufficiently  learned,  if  not  by  study, 
at  least  by  experience,  that  the  system  of  the  double  standard 
is  not  only  a  fallacy,  but  an  impossibility,  in  assuming  a  fixed 
relation  between  the  values  of  two  different  products,  gold  and 
silver.  The  value  of  each  of  these  depends  upon  the  quantity 
produced,  and  this  quantity  is  beyond  the  power  of  legislation. 
A  diminution  of  value  is  and  ever  will  be  the  inevitable  result 
of  the  increase  of  supply.  During  the  fifty-six  years  which 
immediately  preceded  the  year  1850,  the  United  States  coined 
in  gold  $85,588,038,  and  in  silver  $75,322,969,  which  rep- 
resents a  supply  of  about  lyrfV  of  gold  to  each  dollar  of 
silver.  From  1850  to  1866,  inclusive,  the  coinage  of  gold 
has  been  $759,648,453,  and  of  silver  $59,027,843,  which  rep- 


SILVER  STANDARD  REJECTED  67 

resents  about  $12.50  in  gold  to  $1  in  silver.1  Admonished  by 
so  great  a  change  in  the  relative  supply  of  the  two  metals,  the 
United  States  now  share  without  reserve  the  conviction,  more 
and  more  extended  throughout  the  civilized  world,  that  it  is 
impossible  to  establish  a  double  standard  which  must  presup- 
pose a  fixed  relation  between  the  two  metals." 

With  England,  Prussia,  Austria,  the  United  States,  and  the 
smaller  powers  determined  in  favor  of  the  gold  standard,  and 
France  ready  to  accept  it  cheerfully  so  long  as  French  coins 
were  made  the  basis  of  arrangements,  the  Dutch  delegate,  who 
had  suggested  that  it  might  be  impracticable  and  unwise  to 
have  all  the  nations  adopt  the  same  standard,  found  little  hope 
of  support.  The  nearest  approach  to  it  came  from  Jacobi,  of 
Russia,  who  could  not  perceive  the  necessity  of  agreeing  upon 
one  standard  or  the  other.  He  thought  it  would  be  sufficient 
to  stipulate  that  such  and  such  coins  should  be  received  and  ac- 
cepted as  legal  coins,  each  state  remaining  in  other  respects 
free  to  strike  other  coins  according  to  the  convenience  and 
necessities  of  its  internal  transactions.  But  the  French  dele- 
gate, Lavenay,  at  once  pointed  out  that  this  would  not  do.  The 
government  of  a  state  on  a  silver  standard,  for  example,  strik- 
ing legal  coin  only  in  that  metal,  could  hardly  consent  to  give 
a  legal  character  to  foreign  gold,  and  its  public  banks  could  not 
be  compelled  to  take  metallic  specie  which  their  government 
had  prohibited  for  its  own  issues.  Moreover,  the  foreign  coin, 
said  Lavenay,  might  drive  out  the  national  coin,  thus  giving 
preference  to  a  metal  the  state  had  discarded.  Parieu  and 
Feer-Herzog  added  some  further  objections  to  Jacobi's  idea, 


i  The  clever  bimetallist  of  to-day  would  somewhat  weaken  the 
force  of  this  statement  by  simply  referring  to  the  tables  of  the  com- 
mercial ratio  of  silver  to  gold  and  pointing  out  that,  while  the  pro- 
portion of  production  between  the  two  metals  so  radically  changed, 
the  average  commercial  ratio  of  silver  to  gold  was  15.40  to  1  for  the 
seventeen  years  1850  to  1800.  and  15.81  to  1  for  seventeen  years  pre- 
vious to  1850  —  a  difference  of  only  ^j.  This  variation,  however,  was 
sufficient  to  produce  the  results  Ruggles  described. 


68  THE  CONFERENCE  OF  1867 

which  would,  they  evidently  thought,  weaken  the  French 
basis  of  the  proposed  unity.  Parieu  proposed  a  vote  on  the 
third  question,  for  the  adoption  of  the  silver  standard  ex- 
clusively, and  the  conference  unanimously  rejected  it. 

Lavenay  then  observed  that,  the  general  opinion  of  the 
conference  seeming  to  be  for  gold  as  the  standard,  the  only 
difficulty  remaining  was  as  to  transitory  measures,  by  which 
states  not  maintaining  that  standard  could  gradually  come  to 
it.  These  measures  gave  rise  to  considerable  discussion.  The 
Prussian  delegate  desired  that  the  silver-standard  countries 
be  given  an  opportunity  to  adopt  the  double  standard  tem- 
porarily before  going  entirely  to  gold.  Parieu  agreed  with  him. 
The  fact  that  it  was  much  easier  for  a  government  to  desire 
a  gold  standard  than  to  actually  reach  it  was  somewhat  em- 
barrassing and  was  not  altogether  agreeable  to  France.  Fi- 
nally, the  question  was  modified  so  as  to  read  as  follows:  "  On 
the  contrary,  is  this  result  attainable  on  the  basis  and  condition 
of  adopting  the  exclusive  gold  standard,  leaving  each  state  the 
liberty  to  keep  its  silver  standard  temporarily?  "  Every  state 
voted  in  the  affirmative,  with  the  exception  of  the  Xetherlands. 
Mees  said  he  considered  that  the  adoption  of  the  gold  standard 
by  all  countries  wrould  reduce  silver  to  change  money,  and  that 
consequently  gold  would  rise.  Moreover,  he  thought  a  mone- 
tary union  not  very  certain  to  be  adopted,  and  that  the  labor 
of  the  conference,  to  use  one  of  Parieu's  figures,  was  "  only  a 
seed  sown,  the  germination  of  which  cannot  be  foreseen." 
Mees  seems  to  have  possessed  a  prophetic  vision  somewhat 
superior  to  that  of  other  delegates.  But,  in  the  abundance  of 
gold,  his  fears  seemed  to  them  to  be  based  on  a  theory  con- 
tradicted by  the  practical  facts  of  the  situation.  Yrolik,  the 
other  representative  of  Holland,  excused  himself  from  voting 
in  the  affirmative,  on  the  ground  that  the  question  seemed  tc 
imply  a  fixed  time  in  advance  when  the  silver  standard  every- 
where must  give  place  to  gold.  He  would  have  voted  for  it, 


METHODS  OP  TRANSITION  69 

lie  said,  had  each  state  been  left  the  judge  of  the  time  it  should 
keep  another  standard.  But  if  the  states  adjoining  Holland 
came  to  a  mutual  understanding,  Holland  would  be  forced  to 
imitate  the  example.  His  position  was  very  much  that  of 
Mees,  except  more  disingenuous. 

By  this  vote  questions  IV.  and  V.  were  practically  solved 
in  the  negative  —  that  is,  the  double  standard  and  the  proposi- 
tion to  establish  identities  or  partial  coincidences  of  monetary 
types  on  the  basis  of  silver  coins,  leaving  each  state  at  liberty  to 
regulate  the  gold  standard,  were  rejected.  Question  VI.  was 
suppressed  by  reason  of  the  modification  adopted  to  the  third 
question. 

At  the  fourth  sitting,  on  June  21st,  a  long  discussion  took 
place  relating  to  the  nature  of  the  necessary  transition  from  the 
silver  and  the  double  standard  to  the  gold.  Much  difference 
of  opinion  was  manifested  over  the  question  whether  a  fixed 
relation  between  the  two  metals  should  be  established.  By 
the  adoption  of  the  gold  standard  the  seventh  question  really 
took  this  form:  Would  the  advantage  of  internationally, 
which  gold  coins  would  have,  be  a  sufficient  guarantee  of  their 
continuance  in  the  circulation  of  each  state,  or  would  it  be 
necessary  beyond  that  to  stipulate,  either  for  a  certain  limit  in 
the  relation  between  gold  and  silver,  or  for  the  case  where  inter- 
national coins  would  incur  the  risk  of  being  completely  ex- 
pelled from  circulation  in  some  of  the  contracting  states? 
Parieu  said  that  the  sub-committee  had  prepared  this  question 
in  anticipation  of  a  possible  adoption  of  the  double  standard, 
but  as  the  conference  had  decided  for  a  gold  standard,  and  that 
the  double  standard  must  be  transient,  he  should  consider  it 
wise  if  the  conference  should  declare  a  certain  minimum,  below 
which  the  relations  between  gold  and  silver  should  not  be  fixed. 
But  the  Belgian  and  i^Tetherland  delegates  thought  it  better 
to  leave  each  state  to  settle  the  relation  for  itself.  Lavenay, 
the  French  delegate,  was  inclined  to  agree  with  them,  for,  he 


70  THE  CONFEKENCE  OF  1867 

said,  all  international  negotiations  would  be  transacted  in  gold, 
and,  if  a  state  established  a  bad  tariffication  of  coins,  gold  would 
not  go  there.  The  Austrian  delegate  agreed  with  Parieu  that 
some  principle  for  transitory  measures  should  be  sanctioned  by 
the  conference,  but  he  thought  it  difficult  to  fix  a  limited  mini- 
mum relation  between  the  two  metals  for  the  states  with  a 
silver  standard.  He  considered  it  better  to  adhere  to  a  certain 
generality,  and,  for  that  reason,  he  proposed  the  following 
substitute  for  the  seventh  question: 

"  The  advantage  of  internationality,  which  coins  would  acquire 
from  the  metal  adopted  as  a  common  standard,  would  not  be  a  suffi- 
cient guarantee  for  keeping  them  in  circulation  in  each  state,  but 
it  would  be  necessary  to  stipulate  also  in  countries  that  have  had 
the  silver  standard  up  to  this  time,  as  well  as  in  those  of  the  double 
standard,  that  the  relation  between  the  value  of  gold  and  silver 
should  not  be  established  at  a  rate  too  low  to  permit  the  serious 
introduction  of  gold." 

The  question  was  a  difficult  one.  The  members  of  the 
conference  appreciated  that  they  were  in  deep  water.  For 
the  first  time  the  French  delegates  showed  that  they  were  not 
sure  of  their  position  and  their  opinions  did  not  always  coin- 
cide. Parieu  said  he  would  willingly  adopt  Baron  do  Hock's 
proposal  for  countries  of  a  silver  standard,  but  he  doubted  if 
it  would  suit  countries  with  a  double  standard  which  had  long- 
had  a  legal  relation  between  gold  and  silver,  and  it  would  be 
difficult  to  suppose  that  on  adopting  a  gold  standard  they 
would  modify  their  metallic  relations  so  as  to  drive  gold  out  of 
circulation.  The  French  delegate,  Ilerbet,  thought  the  ques- 
tion could  come  up  in  special  conventions  later  and  be  settled 
by  delegates  authorized  to  do  so.  Ruggles  asked  that  the  vote 
be  postponed  till  the  next  sitting,  as  he  did  not  clearly  see  the 
effect  of  the  amendment.  Parieu  was,  nevertheless,  disposed 
to  put  the  proposition  to  vote,  the  delegate  from  the  United 
States  giving  his  adhesion  or  refusal  some  other  time.  Dr. 
Kern  thought  Baron  do  Hock's  proposition  a  happy  com- 
promise of  diverging  opinions  tending  to  the  same  end  and  dif- 
fering only  in  comprehensiveness ;  for  the  good  of  the  confer- 


NO  LEGAL  RATIO  FOR  THE  UNITED  STATES  71 

* 

ence,  he  thought  the  vote  should  take  place  immediately.  Rug- 
gles  excused  himself  from  voting  because,  he  said,  he  did  not 
understand  the  question.  The  United  States,  he  told  the  con- 
ference, would  not  consent  to  accept  any  fixed  relation  between 
gold  and  silver,  for  the  double  standard  would  be  abolished 
only  when  no  such  relation  existed.  Parieu  maintained  that 
the  double  standard  still  existed  in  the  United  States,  and,  of 
course,  the  relation  between  gold  and  silver,  which  was  1  to  16. 
Ruggles  replied  that,  while  legislatively  the  double  standard 
existed,  it  was  virtually  abolished  in  practice,  and  "  hence  the 
United  States  has  the  gold  standard  alone." 

"  Reasoning  in  that  way,"  returned  Parieu,  "  as  France 
coins  a  less  number  of  5-franc  pieces  than  America  does  dol- 
lars, we  might  say,  like  Mr.  Ruggles,  that  France  has  the  gold 
standard  alone,  and  that  is  what  nobody  would  assert." 

Jacobi  remarked  that  the  United  States  must  clearly  be 
considered  as  having  the  double  standard,  unless  a  law  was 
passed  prohibiting  the  coinage  of  silver  dollars.  There  was 
a  further  running  debate  on  the  subject,  resulting  only  in 
greater  confusion  and  doubt  in  the  minds  of  the  delegates. 
Finally,  Parieu  put  the  Hock  proposal  to  vote,  and  it  was 
adopted  without  dissent.  Ruggles,  howrever,  withheld  his  vote, 
and  the  Prussian  delegates  did  not  vote,  declaring  that  their 
instructions  did  not  permit  them  either  to  discuss  or  to  vote 
upon  transient  measures  which  might  require  the  co-operation 
of  their  Northern  confederates. 

Though  the  difficulties  of  the  question  were  thus  avoided 
in  the  conference,  it  must  have  been  evident  to  all  the  dele- 
gates that  they  could  not  be  thus  avoided  in  any  fixed  inter- 
national agreement.  It  would  have  been  necessary,  had  the 
acts  of  the  conference  assumed  practical  form  later,  to  create 
some  sort  of  a  system.  It  would  have  proved  vain  to  have  de- 
cided upon  an  international  money  of  gold  without  fixing  a 
relation  for  it  with  the  silver  money  in  states  where  the 


72  THE  CONFERENCE  OF  1867 

double  standard  was  transitory,  for,  with  the  relation  between 
the  two  metals  differing  in  different  countries,  and,  as  gold 
comes  in  more  readily  when  the  coefficient  of  silver  is  higher, 
countries  in  a  transitory  situation  would  find  themselves  at  an 
advantage  according  to  the  ratio  they  maintained.  But  the 
delegates  saw  that  the  subject  was  best  avoided  for  the  time 
for  the  sake  of  securing  as  complete  an  agreement  on  principles 
as  possible,  leaving  to  the  future  the  settlement  in  some  way 
of  vexatious  details.  The  question  was  one  that  the  American 
delegate  could  not  easily  appreciate.  His  country  had  no  cir- 
culation in  silver  and  its  condition  was  altogether  different 
from  that  prevailing  among  the  states  of  Europe,  so  closely 
situated  that  a  variation  in  the  lawful  ratios  of  different  states 
might  have  made  the  circulation  of  an  international  gold  coin 
impossible  in  some  countries  and  deprived  them  of  the  benefits 
of  internationality.  But  the  United  States  government,  as 
represented  by  Ruggles,  saw  in  the  question  of  fixing  a  ratio, 
or  fixing  it  within  certain  limits,  the  possibility  of  prolonging 
the  double  standard,  something  that  it  scorned  in  any  form. 
It  desired  no  ratio  between  gold  and  silver,  except  such  as 
commerce  proclaimed  from  time  to  time.  Its  policy  was  the 
gold  standard  without  compromise,  and  so,  without  instructions 
as  to  ratios,  Ruggles  was  at  a  loss  to  find  his  position  on  a 
matter  which  would  affect  the  European  states,  even  if  they 
adopted  the  gold  standard. 

Jiapoleon  was  highly  pleased  with  the  course  events 
had  taken  thus  far,  and  sought  for  some  way  to  give  to  the 
conference  an  impressive  expression  of  his  imperial  gratifica- 
tion. The  Marquis  de  Moustier,  Minister  of  Foreign  Affairs, 
had  made  a  formal  report  to  him,  speaking  of  the  eagerness 
with  which  the  sovereign  states  of  Europe  and  the  government 
at  Washington  had  sent  delegates  to  the  conference  and  of  its 
bright  prospects.  It  was  published  in  The  Mointcnr  of  the 
26th,  on  which  day  the  conference  reassembled.  With  it 


PRINCE  JEROME  APPEARS  73 

appeared  Prince  Jerome  ISTapoleon,  whom  the  Emperor  had 
appointed  to  preside,  as  a  mark  of  his  imperial  favor.  In  tak- 
ing the  chair  the  Prince  complimented  the  conference  on  its 
progressive  ideas  and  011  the  course  it  had  taken,  and  expressed 
the  hope  that  it  would  continue  its  labors  so  well  begun. 
Parieu  responded  by  assuring  the  Prince  how  highly  honored 
the  conference  felt  by  the  presidency  of  His  Imperial  High- 
ness, and  the  Count  d'Avila  proposed  that  an  address,  ex- 
pressing the  profound  gratitude  of  the  conference,  be  pre- 
sented to  the  Emperor.  The  proposition  was,  of  course,  ap- 
proved and  given  to  Parieu  for  transmission. 

But.  it  is  doubtful  if  this  mark  of  approval  had  quite  the 
effect  the  Emperor  intended  or  desired.  The  English  dele- 
gates had  said  very  little  up  to  this  time,  but  had  voted,  for  the 
several  propositions  which  the  conference  had  adopted.  As 
soon  as  the  formalities  in  honor  of  the  Prince  were  concluded, 
and  he  had  announced  that  the  next  question  would  be  taken 
up,  Rivers  Wilson  arose  and  read  the  following  declaration : 

"  Before  recommencing  the  discussion  of  the  list  of  questions, 
the  English  delegates  deem  it  their  duty  to  the  government  they 
represent,  to  the  members  of  the  conference,  and  particularly  to  the 
government  of  the  Emperor,  by  whose  invitation  they  are  present, 
and  to  prevent  any  misunderstanding,  to  indicate  their  delicate  and 
exceptional  situation.  They  are  convinced  of  the  necessity  of  this 
declaration,  from  the  serious  and  practical  turn  the  discussion  has 
borne  to  this  time,  and  particularly  from  the  high  signification  that 
must  attach  in  public  opinion  to  the  presidency  of  His  Imperial 
Highness,  Prince  Napoleon,  and  to  the  labors  that  must  result  from 
it. 

"  The  English  government  was  obliged  to  accept  the  cordial  invi- 
tation from  the  government  of  the  Emperor  to  participate  in  this 
conference,  because  a  refusal  would  have  shown  a  want  of  courtesy, 
and  would  have  made  it  liable  to  accusations  of  prejudice  upon  this 
very  important  question. 

"  Indeed,  the  English  nation  is  in  a  position  much  more  inde- 
pendent upon  this  question  than  most  Continental  nations. 

"  So  long  as  public  opinion  has  not  decided  in  favor  of  a  change 
of  the  present  system,  which  offers  no  serious  inconveniences, 
either  in  wholesale  or  retail  trade,  and  until  it  shall  be  incontestably 
demonstrated  that  a  new  system  offers  advantages  sufficiently  com- 
manding to  justify  the  abandonment  of  that  which  ^s  approved  by 
experience  and  rooted  in  the  habits  of  the  people,  the  English 
government  could  not  believe  it  to  be  its  duty  to  take  the  initiative 


74  THE  CONFERENCE  OP  1867 

in  assimilating  its  coinage  with  those  of  the  countries  of  the 
continent. 

rt  But  the  English  government  will  always  be  ready  to  aid  any 
attempt  to  enlighten  and  guide  public  opinion  in  the  appreciation 
of  the  question,  and  facilitate  the  discussion  of  the  means  by  which 
such  an  assimilation,  so  advantageous  in  theory,  may  be  effected. 

"  Thus,  while  consenting  to  be  repie&euted  in  this  conference, 
the  English  government  has  found  it  necessary  to  place  the  most 
careful  restrictions  upon  its  delegates;  their  part  is  simply  to  listen 
to  the  different  arguments,  to  study  the  situation  as  developed  in 
discussion,  and  to  report  to  their  government.  Thus  far  they  have 
found  no  difficulty  in  voting  in  favor  of  all  the  propositions  adopted 
by  the  conference,  because  their  principles  agreed  with  the  system 
now  in  force  in  England.  But  they  cannot  vote  for  any  question 
tending  to  bind  their  government  or  express  any  opinion  to  induce 
the  belief  that  Great  Britain  would  adopt  the  convention  of  1865." 

If  the  conference  had  any  expectations  of  accomplishing 
any  practical  results,  they  must  have  been  somewhat  shaken 
by  this  declaration.  It  indicated  that  the  English  government 
had  little  real  desire  for  monetary  unity,  except  on  the  basis 
of  English  coinage,  and,  apparently,  not  much  for  that.  The 
proposition  to  establish  an  equation  of  the  coins  of  England, 
the  United  States,  and  the  Latin  Union,  by  reducing  the  fine- 
ness of  the  sovereign,  lost  much  of  its  practical  value  by  such 
a  declaration.  Although  one  of  the  French  delegates,  Herbet, 
explained  that  the  reserves  made  by  the  English  delegates  were 
found  in  Lord  Stanley's  despatch  to  the  French  ambassador  in 
London,  announcing  England's  participation  in  the  confer- 
ence, it  is  worth  noting  that  the  English  delegates  did  not 
deem  it  necessary  to  inform  the  conference  of  their  "  delicate 
and  exceptional  situation  "  till  the  presidency  had  been  be- 
stowed by  the  Emperor  on  Prince  Jerome.  It  is  possible  that 
Lord  Stanley  began  to  feel  that  England  was  in  danger  of  mak- 
ing too  cordial  a  demonstration  in  the  Napoleonic  monetary 
procession.  He  had  learned  something  about  Napoleon's 
dreams  of  Latin  influence. 

Prince  Jerome  expressed  the  opinion,  after  Wilson  had 
finished,  that  the  labors  of  the  conference  were  essentially  theo- 
retical ;  that  practical  results  must  be  effected  in  future  inter- 
national conferences,  and  that,  therefore,  the  English  delegates 


ENGLAND'S  DELICATE  SITUATION  75 

need  not  fear  to  express  their  opinion  on  any  question,  since  it 
could  not  bind  their  government  any  more  than  the  opinions 
of  other  members.  He  then  announced  that  the  conference 
would  take  up  the  question  whether  it  was  necessary  for  the 
success  of  monetary  unity  to  constitute  a  unity  at  present, 
identical  everywhere  in  metallic  composition,  weight,  and  de*- 
nomination,  and,  if  so,  what  bases  should  be  assigned  to  it, 
or  was  it  sufficient  to  constitute  common  types,  having  a  com- 
mon denominator  of  medium  amount,  as,  for  instance,  multi- 
ples of  5  francs  for  the  gold  coins. 

But  the  statement  of  the  English  delegates  had  obviously 
brought  a  change  over  the  conference.  Count  d'Avilla,  speak- 
ing for  Portugal,  the  only  other  gold-standard  country  repre- 
sented in  the  conference,  thought  his  government  would  not 
object  to  reduce  the  fineness  of  its  gold  coins  from  .916  to  .900, 
but  naturally  England  would  have  to  set  the  example.  He 
added  that  he  was  not  aware  of  the  difficulties  in  a  change  of 
currency  for  the  English  system ;  in  theory,  there  appeared  to 
be  none,  to  explain  the  reserve  of  the  delegates  from  Great 
Britain.  It  would  be  necessary,  in  his  opinion,  to  change  the 
sovereign,  as  the  United  States  intended  to  change  their  dollar; 
and,  in  case  England  followed  the  example  of  the  United 
States,  Portugal  would  naturally  come  in  next,  particularly  as 
the  pound  sterling  was  legal  tender  there.  If  England  could 
not  change  the  fineness  of  her  sovereigns,  she  should,  he 
thought,  allow  them  to  circulate  as  25  francs  for  a  time. 

It  was  the  opinion  of  Baron  de  Hock  and  other  delegates 
that  the  adoption  of  the  French  monetary  system  as  a  centre 
for  the  proposed  unification  really  settled  the  fineness  of  the 
new  coins  at  nine-tenths,  but  Feer-Herzog  held  that  nothing 
in  the  agreement  of  1865  could  bind  this  conference.  He 
feared,  he  said,  the  frequent  mention  of  that  agreement  had 
misled  the  English  delegates,  and  induced  them  to  declare 
they  could  not  vote  for  its  adoption  by  Great  Britain. 


76  THE  CONFERENCE  OF  186r 

After  much  discussion  the  question  was  proposed  by 
Prince  Napoleon  in  this  form:  "  Should  ther6  be  types  with 
a  common  denominator  for  weight  in  gold  coins  of  identical 
fineness?"  It  was  adopted  without  dissent.  The  Prince 
then  proposed  a  vote  of  nine-tenths  as  the  fineness  of  inter- 
national coins,  and  that  was  similarly  adopted,  Graham  of  Eng- 
land explaining  that  he  voted  for  that  degree  of  fineness  only 
on  the  hypothesis  of  an  eventual  recoinage. 

At  the  next  sitting,  on  the  28th,  the  subject  of  fixing  the 
common  denominator  was  taken  up.  France,  Portugal,  Aus- 
tria, Holland,  and  Russia  advocated  the  5-franc  piece;  Eng- 
land and  Sweden,  the  10-franc  piece.  The  conference  finally 
voted,  13  to  2,  to  adopt  the  5-franc  piece.  England  and 
Sweden  voted  in  the  negative.  The  German  states  and  Bel- 
gium did  not  vote.  The  Belgian  delegates  considered  the 
5-franc  piece  too  small.  The  Prussian  delegate  said  he  did  not 
know  what  union  money  would  be  best  suited  for  Prussia. 
The  representatives  of  Bavaria,  Baden,  and  Wiirtemburg 
stated  that,  as  they  were  bound  by  the  monetary  and  customs 
union  of  Germany,  they  felt  compelled  to  leave  the  states  free 
to  act  in  concert.  It  is  noticeable  that  the  German  states  be- 
gan to  manifest  a  decided  reserve  immediately  after  the  Eng- 
lish delegates  felt  it  their  duty  to  declare  their  "  delicate 
situation." 

The  discussion  then  turned  to  the  question  whether  it 
would  be  expedient  for  the  types  of  the  coins  determined  by 
the  monetary  convention  of  the  23d  of  December,  1805,  for 
the  sake  of  unification  and  reciprocity,  to  be  completed  by  neAV 
types.  The  delegate  of  the  United  States  made  a  long  state- 
ment in  advocacy  of  the  issue  by  France  of  a  2  5-franc  piece, 
as  a  means  of  securing  a  coin  approximating  in  value  to  the 
half-eagle  and  the  sovereign.  He  argued  that  it  would  not 
be  objectionable,  as  impairing  the  symmetry  of  the  metric  sys- 
tem, for  France  had  not,  and  never  had,  a  gold  coin  contain- 


RUGGLES'S  APPEAL  FOR  A  NEW  COIN  77 

ing  an  even  number  of  grammes.  Giving  statistics  of  the  gold 
coinage  of  the  United  States,  England,  and  France  since  1849, 
he  added:  "  The  money  of  the  world  must  be  unified  now  or 
never.  It  is  fortunate  that  the  gold  sovereign  of  Great  Britain, 
around  which  the  prejudices  of  the  English  people  naturally 
cluster,  only  requires  to  be  reduced  to  the  value  of  25  francs, 
a  diminution  of  04  milligrammes  in  weight  of  fine  gold,  being  a 
reduction  in  value  of  only  twopence,  English,  or  four  cents 
of  the  United  States.  In  truth,  the  reduction  to  be  made  by 
Great  Britain  is  less  than  one-fourth  of  that  required  from 
the  United  States.  It  is  no  fault  of  France,  but  her  good 
fortune,  that  the  burden  and  inconvenience  of  recoinage,  and 
the  modification  of  contracts,  will  be  almost  exclusively  borne 
by  the  United  States  and  Great  Britain,  while  France,  with  her 
six  milliards  of  gold  in  circulation  will  share  without  cost  in  the 
general  advantage  and  the  honor  of  having  unified  the  money 
of  the  world.  It  is  under  these  circumstances  that  it  is  asked, 
in  the  name  of  the  United  States,  that  France,  in  a  spirit  of 
wise  liberality,  will  effectually  contribute,  as  she  easily  may, 
to  the  great  work  of  practical  unification,  by  adding  the  25- 
franc  gold  piece  to  her  present  coins.  Such  a  coin  will  circu- 
late side  by  side  everywhere  and  in  perfect  equality  with  the 
half-eagle  of  the  United  States  and  the  sovereign  of  Great 
Britain.  These  three  gold  coins,  types  of  the  great  commercial 
nations,  fraternally  united  and  differing  only  in  emblems,  will 
go  hand  in  hand  around  the  globe,  freely  circulating  through 
both  hemispheres  without  recoinage,  brokerage,  or  other  im- 
pediment. This  opportune  concession  of  France  to  the  spirit 
of  unity  will  complete  the  work  of  civilization  she  has  had  so 
much  at  heart,  and  will  inaugurate  that  new  monetary  era, 
the  lofty  object  of  the  international  conference,  and  tho 
noblest  aim  of  the  concourse  of  nations,  as  yet  without  parallel 
in  the  history  of  the  world." 

Prince  Xapoleon  replied  to  this  earnest  appeal  that  France 


78  THE  CONFERENCE  OF  1867 

did  not  object  to  the  proposition  to  coin  the  new  piece,  but, 
the  convention  of  1865  being  in  force,  the  French  government 
must  have  an  understanding  with  its  associates.  He  thought, 
however,  that  the  revision  of  that  diplomatic  act,  on  the  point 
in  question,  would  meet  with  no  difficulty.  The  Italian  dele- 
gates thought  that  their  government  would  not  object  to  receiv- 
ing 25-franc  pieces,  provided  it  was  not  required  to  coin  them. 

Before  a  vote  was  taken  on  the  issue  of  this  coin,  the  con- 
ference decided  that  it  would  be  best  to  act  on  a  general  prop- 
osition as  to  the  currency  of  coins  of  one  country  in  other 
countries,  and,  finally,  one  was  adopted,  declaring  that  gold 
coins  with  the  common  denominator  of  5  francs  should  have 
legal  circulation  in  the  states  mutually  bound  by  the  monetary 
convention.  There  was  no  dissenting  voice,  but,  again,  Eng- 
land and  the  German  states  declined  to  vote. 

Returning  to  the  discussion  of  the  25-franc  piece,  Graham, 
the  English  delegate,  expressed  the  opinion  that  the  intro- 
duction of  this  and  the  proposed  15-franc  piece  into  the  French 
system  would  make  too  many  pieces  and  be  a  defect.  He  asked 
if  France  really  intended  to  coin  25-franc  pieces.  Prince  Na- 
poleon replied  that  France,  if  consulting  its  own  convenience, 
would  not,  but  to  facilitate  unification  it  would  make  this  con- 
cession to  the  United  States;  it  appeared  also  that  this  coin 
would  equally  accommodate  England  and  Austria.  The 
Spanish  delegate  said  it  would  also  accommodate  his  country 

England,  evidently,  did  not  desire  to  be  accommodated. 
Not  unless  such  a  coin  was  issued  by  France  could  England 
find  any  practicable  way  of  approximating  her  coinage  to  that 
of  the  Latin  Union,  a  basis  for  approximation  which  the  Eng- 
lish delegates  had  voted  for.  Their  action  seemed  to  indicate 
a  feeling  that  the  conference  had  already  gone  too  far  to  suit 
them,  or  that  they  had  discovered  Napoleon's  motives.  The 
25-franc  piece  was,  however,  adopted  without  objection  from 
any  state. 


GERMAN  STATES  SHOW  RESERVE  79 

The  coinage  of  a  15-franc  piece  was  especially  desired  by 
some  states,  and  suited  southern  Germany,  in  case  of  mone- 
tary unification.  The  Prussian  delegate  said  he  could  no  more 
vote  on  this  proposition  than  on  the  others.  Monetary  uni- 
formity was  certainly  desired  in  Prussia,  he  said,  but  all  he 
could  do  was  to  vote  for  the  gold  standard,  though  he  did  not 
know  when  or  how  Prussia  would  pass  from  the  silver  to  the 
gold  standard.  Dr.  Kern  complained  of  the  apparent  indif- 
ference of  the  representatives  of  certain  states  as  to  measures 
which  were  clearly  intended  for  their  benefit.  Without  re- 
gard to  preference  for  his  own  country,  he  said,  he  voted,  in  a 
spirit  of  conciliation,  because  the  delegates  from  Austria  and 
the  United  States  desired  it,  conceding  a  change  in  their  coin- 
age, and  he  had  believed  that  England  would  do  the  same. 
But  he  was  surprised  to  hear  the  English  delegate  say  that  the 
25-franc  piece  did  not  appear  to  him  useful,  and  he  did  not 
see  the  inconvenience  of  adopting  the  15-franc  piece,  so  long 
as  the  states  particularly  interested,  and  especially  Prussia, 
would  not  pronounce  in  its  favor,  even  theoretically.  Rivers 
Wilson  explained  that  his  colleague  placed  himself  in  a  purely 
theoretical  point  of  view,  when  speaking  of  the  25-franc  piece; 
it  would,  he  considered,  be  rather  injurious  than  useful  to  the 
general  economy  of  the  French  system,  but  it  would  not  be  so 
in  a  monetary  union  between  England  and  Erance.  This  was 
practically  equivalent  to  his  saying  that  he  did  not  expect  any 
such  union. 

Prince  Napoleon  deprecated  these  disagreements.  The 
aims  of  the  conference  were  definite  and  practical,  he  said, 
and  it  was  their  duty  to  direct  their  efforts  accordingly.  Rivers 
Wilson  replied  that  England  could  not  but  appreciate  the  in- 
tention with  which  it  had  been  proposed  to  introduce  the  25- 
franc  piece,  a  diplomatic  way  of  saying  that  England  was  de- 
sirous of  none  of  the  favors  the  conference  was  anxious  to 
accord.  Parieu  endeavored  to  pour  oil  on  the  troubled  waters 


80  THE  CONFERENCE  OF  1867 

by  remarking  that  the  15  and  25  franc  pieces  would  be  an 
"  invitation  "  to  the  states  who  thought  they  were  not  yet  pre- 
pared to  decide.  Prince  Napoleon  suggested  that  the  con- 
ference vote  on  the  question  whether  the  15-franc  piece  should 
be  included  in  the  terms  of  monetary  union  or  reserved  till 
later.  Seven  states  voted  to  include  at  once,  seven  voted  in 
the  negative,  and  six  did  not  vote.  The  affirmative  votes 
came  from  France,  Spain,  the  United  States,  Greece,  Holland. 
Portugal,  and  Russia;  the  negative,  from  Austria,  Baden, 
Switzerland,  Italy,  Denmark,  Sweden,  and  Norway.  Had  the 
German  states  manifested  the  slightest  disposition  for  unity, 
all  of  these  states  would  have  voted  in  the  affirmative,  except 
Sweden  and  Norway,  whose  representatives  opposed  the  crea- 
tion of  too  many  types.  The  question  of  regulating  by  common 
obligations  the  composition,  limits  of  admission  in  payments, 
and  the  quota  of  issue  of  silver  and  base  coins  was  omitted  by 
common  consent,  as  impossible  of  settlement  at  that  time;  so 
also  was  the  twelfth  and  last  question,  which  was  proposed 
only  for  consideration  in  case  the  conference  could  not  agree 
upon  any  of  the  principles  laid  down  in  the  first  part  of  the  list. 
The  theoretical  work  of  the  conference  was  practically 
completed  by  the  unanimous  adoption  of  a  proposal  by  Baron 
de  Hock,  of  Austria,  endorsed  by  Jacobi,  of  Russia,  relating 
to  the  principles  involved  in  the  eleventh  question  as  to  the 
practicability  of  defining  precisely  the  means  of  control  for 
securing  exactness  in  the  striking  of  the  common  types  of  in- 
ternational money.  The  measures  of  verification  and  control, 
it  was  proposed,  should  be  specified  in  the  arrangements  be- 
tween the  states,  the  following  principles  being  fixed : 

"  1.  The  money  shall  be  coined  of  its  full  standard  and  weight. 
•without  abatement  for  coinage  or  any  remedy;  in  no  case  must  there 
be  connected  any  particular  interest,  in  view  of  any  profit,  with  the 
fabrication  of  money. 

"  2.  The  kilogramme  shall  be  established  as  a  weight  for  the 
common  coins;  the  weights  used  by  the  mints  must  be  made  after  a 
common  normal  weight. 


SEEKING  A  PRACTICAL  AGREEMENT  81 

"  3.  Common  methods  of  assay  and  equal  limits  of  tolerance  for 
standard  and  weight  of  the  common  coins  must  be  agreed  upon. 

"  4.  Coins  of  the  same  value  must  have  the  same  diameter;  they 
shall  bear  the  date  of  the  year  when  they  were  coined. 

"5.  When  many  pieces  coined  in  the  same  year  are  found  to  be 
defective,  by  .a  process  to  be  agreed  upon,  the  government  in  de- 
fault shall  call  in  all  the  pieces  issued  in  that  year. 

"(>.  An  understanding  shall  be  had  as  to  the  methods  of  with- 
drawing   from    circulation    all    clipped    coins,    those   diminished    in 
weight  beyond  the  limit  of  tolerance,  or  those  on  which  inscriptions  , 
have  become  illegible. 

"  7.  It  shall  be  held  as  a  principle  that  each  state  shall  punish 
violations  of  the  monetary  laws  of  the  other  states,  as  well  as 
infractions  of  their  own  laws,  and  on  this  principle  a  monetary  cartel 
shall  be  agreed  upon." 

At  the  seventh  sitting,  July  2,  the  conference  undertook 
to  analyze  and  specify  the  results  of  its  theoretical  labors  and 
to  come  to  an  understanding  as  to  the  means  of  arriving  at  a 
practical  solution.  Baron  de  Hock  considered  an  understand- 
ing by  special  conventions  with  the  states  of  the  Latin  Union 
better  than  for  each  state  to  proceed  by  separate  and  isolated 
legislative  measures.  The  entire  process,  he  maintained,  from 
the  metallic  composition  to  the  means  of  control,  should  har- 
monize, and  the  monetary  regulations  in  the  states  of  the 
union  should  give  assurances  of  stability.  To  a  suggestion 
that  the  arrangement  for  the  adoption  of  the  system  of  the 
Latin  Union  did  not  expressly  stipulate  the  preliminary  adop- 
tion of  gold  as  a  standard  by  its  four  states,  Prince  Napoleon 
replied  that  it  might  not  be  so  easy  as  some  thought  for  the 
French  government  to  take  the  lead  in  the  selection  of  a  stand- 
ard. To  adopt  gold  exclusively  would  require  a  modification 
of  the  French  law,  and  the  subject,  of  course,  would  have  to 
be  laid  before  the  legislature.  The  double  standard,  he  said, 
had  many  stanch  advocates  in  France,  who  would  certainly 
oppose  the  withdrawal  of  silver  from  circulation.  It  would 
be  very  useful  when  the  subject  was  laid  before  the  French 
legislature  for  his  government  to  rely  on  diplomatic  arrange- 
ments, already  concluded,  showing  that  the  principle  of  the 
single  gold  standard  was  admitted  both  in  theory  and  practice 
6 


82  THE  CONFERENCE  OF  1867 

bj  many  other  states.  ISTapoleon,  having  secured  the  French 
system  as  a  basis  for  unification,  was  evidently  disposed  to  wait 
till  other  states  showed  a  disposition  to  come  to  the  French 
system  before  France  assumed  the  responsibility  of  going  to 
the  metallic  standard  of  other  states.  The  United  States  dele- 
gate was  of  the  opinion  that  the  details  of  the  application  of 
the  system  the  conference  had  adopted  could  not  be  settled 
then,  but  would  have  to  be  regulated  by  subsequent  confer- 
ences. The  adroit  Parieu  then  came  forward  with  a  general 
and  harmless  proposition,  to  the  effect  that  the  conference 
should  express  the  hope  that  the  measures  taken  by  the 
governments  of  the  different  states  "  to  modify  their  monetary 
system,  in  conformity  with  the  basis  laid  down  by  the  con- 
ference, may  end  in  diplomatic  conventions."  It  was  unani- 
mously adopted,  for  it  bound  the  states  to  nothing  whatever, 
and  the  delegates  only  to  the  expression  of  a  hope. 

There  was  another  difference  of  opinion  as  to  the  time 
to  be  allowed  the  different  governments  to  make  known  their 
decisions  upon  the  resolutions  voted  for  by  the  conference,  and 
as  to  the  ultimate  steps  to  be  taken.  In  the  case  of  the  United 
States,  Ruggles  said  it  would  be  necessary  to  submit  measures 
to  Congress,  which  did  not  meet  till  the  next  December.  Ger- 
man states  would  need  to  confer  with  their  confederates,  sign- 
ers of  the  treaty  of  1857.  The  English  delegates  could  not 
promise  a  final  decision  for  England  for  any  fixed  time. 
Prince  Napoleon  submitted  another  innocuous  proposition: 
"  As  soon  as  answers  shall  be  received  from  the  different  states 
to  the  communication  officially  made  to  them  of  the  labors 
of  the  conference  by  the  French  government,  that  govern- 
ment, in  accordance  with  the  answers  that  may  be  received, 
will  call  a  new  conference,  if  necessary."  It  was  adopted. 
He  submitted,  further,  that  it  was  desirable  that  answers  should 
be  received  before  the  15th  of  the  following  February,  and 
Baden,  Bavaria,  Denmark,  Holland,  Portugal,  Prussia,  Rus- 


PROGRESS  OF  MONETARY  UNITY  83 

sia,  Switzerland,  Turkey,  and  Wiirtemburg  voted  for  it.  Aus- 
tria, Belgium,  Italy,  Sweden,  and  Norway  declared  for  Oc- 
tober 1st  —  a  date  only  three  months  off  —  while  the  United 
States  desired  May  15,  and  Great  Britain  June  1,  1868. 

Nothing  remained  for  the  conference  but  the  exchange  of 
farewell  courtesies,  which  took  place  at  the  eighth  and  last 
sitting,  July  6,  and  which  consisted  mainly  of  a  review  of 
the  proceedings  and  decisions  of  the  conference  by  Parieu,  a 
response  for  the  foreign  delegates  by  Baron  de  Hock,  and  an 
expression  of  thanks  from  Prince  Napoleon,  promising  to  be 
an  interpreter  for  the  conference  with  the  Emperor,  who,  the 
Prince  said,  had  "  taken  a  lively  interest  in  its  labors." 

It  must  appear  to  one  who  studies  closely  the  results  of  this 
conference  that,  taken  with  the  Latin  Union  agreement  of  two 
years  before,  the  cause  of  monetary  unity  had  made  marked 
progress.  While  the  discussion  was  largely  theoretical,  and 
although  some  conflicts  of  national  interests  and  occasional 
jealousies  manifested  themselves,  the  apparent  unanimity  of 
the  nations  as  to  the  desirability  of  monetary  union  and  as  to 
many  important  principles,  the  settlement  of  which  was  essen- 
tial, was  most  encouraging  for  the  advocates  of  such  unity. 
Though  dealing  with  theories,  these  delegates  were  not  simply 
theorists.  Many  of  them  were  men  intimately  connected 
with  the  practical  affairs  of  their  governments ;  many  of  them, 
also,  were  the  recognized  authorities  of  the  time  in  financial 
affairs.  The  Emperor  may  have  taken  considerable  pride  in 
the  fact  that  the  Erench  system,  or  that  of  the  Latin  Union. 
\vas  adopted  as  the  basis  of  the  proposed  reform,  but  the  readi- 
ness with  which  it  was  endorsed  by  foreign  delegates  is  assur- 
ance that  national  jealousy  did  not  —  at  first,  any  way  —  color 
their  opinions.  Accustomed  as  this  generation  has  been  to  the 
greatest  diversity  of  views  on  monetary  questions,  and  par- 
ticularly as  to  the  standard  of  value,  it  must  be  considered  ex 
traordinary  that  a  body  of  men  of  the  character  described, 


84  THE  CONFERENCE  OF  1867 

representing  all  the  national  interests,  race  prejudices,  and 
governmental  traditions  of  Europe  and  North  America,  should 
so  nearly  agree  upon  such  important  propositions  regarding  one 
of  the  chief  elements  in  national  life  —  money.  The  explana- 
tion must  be  found  largely  in  the  spirit  of  the  times. 

The  most  notable  act  of  this  conference,  undoubtedly  — 
and,  as  it  proved,  an  act  of  far-reaching  consequences  —  was 
its  adoption  of  the  principle  of  the  gold  standard  for  all  civil- 
ized nations.  It  did  not  mark  the  beginning  of  the  gold  move- 
ment, for  it  had  its  beginning  much  earlier,  as  we  have  seen, 
but  it  marked  the  decisive  turn  in  affairs,  the  consummation 
of  an  economic  movement,  when  nations  which  had  maintained 
a  silver  or  a  double  standard  for  centuries  openly  announced 
their  intention  to  thereafter  seek  the  gold  basis. 

The  conviction  which  controlled  the  conference  regarding 
the  standard  was  well  stated  by  Parieu  in  his  summing-up  of 
the  work  of  the  session.  "  Here,"  he  said,  "  the  laws  that 
brought  precious  metals  into  contact  with  the  wealth  of  com- 
munities, and  which  have  twice  given  a  monetary  system  to 
the  universe,  came  into  consideration.  The  rule  of  these  laws 
was  broken  by  the  great  historic  catastrophe  that  separated 
ancient  from  modern  civilization  by  an  intermediate  period  of 
poverty  and  barbarism,  but  now  strikingly  reproduced  after 
a  lapse  of  eighteen  centuries.  In  the  time  of  Augustus,  when 
gold  had  gained  the  ascendency  in  money  circulation,  the 
Roman  poet  exclaimed: 

"  '  Aera  debant  olim;  melius  nunc  omen  in  auro  est, 
Victaque  cone-edit  prisca  moneta  novae.' 

"  From  the  middle  ages  to  our  day,  the  revolution  that 
Ovid  mentions  incompletely,  for  he  omits  silver,  has  lain  quiet 
till  it  breaks  out  now  with  renewed  strength  and  peculiar 
mineralogical,  industrial,  and  commercial  circumstances.  No 
new  invasion  of  barbarism  can  reverse  its  course  in  Europe, 
where  silver  first  took  the  place  of  iron  and  copper,  and  where 


MOVEMENT  FOR  GOLD  STANDARD  NATURAL  AND  SPONTANEOUS     85 

silver  is  now  displaced  by  gold.  In  most  of  the  civilized  na- 
tions of  Europe  and  America  the  latter  metal  has  become  the 
principal  instrument  of  circulation,  because  its  portability  and 
density  particularly  recommend  it  as  the  material  for  mone- 
tary unity.  When  the  convention  of  the  23d  September, 
1865,  closed,  three  of  the  associate  states  wished  gold  to  be  the 
choice  of  the  convention.  Even  in  the  last  century  a  learned 
man  in  Germany,  where  so  many  grand  ideas  originate,  de- 
clared that  gold  was  destined  to  become  the  bond  of  the  mone- 
tary systems  of  the  world." 

"With  a  proper  understanding  of  this  conference,  the  course 
of  the  succeeding  events  can  be  better  appreciated,  and  we  can 
avoid  the  misapprehension  —  or  wilful  misconstruction  of 
events  —  that  has  been  so  common  in  recent  years.  The 
movement  for  a  gold  standard  —  whether  it  was  a  great  human 
misfortune  or  not  —  did  not  originate  with  men  having  the 
secret  purpose  of  conspiring  in  favor  of  bondholders  and 
money-changers.  The  sentiment  arose  spontaneously  and 
naturally  among  all  civilized  peoples  at  a  time  when  gold  was 
cheap  and  circulated  freely,  and  when  a  reawakened  industry 
was  making  gigantic  strides.  It  was  given  expression  by  men, 
considered  the  wisest  in  their  generation  in  monetary  matters, 
honestly  thinking  that  the  welfare  of  the  human  race  depended 
upon  obedience  to  economic  law,  as  inexorable  as  any  natural 
law.  On  no  other  ground  could  the  chosen  representatives  of 
twenty  civilized  states,  only  two  of  them  maintaining  a  gold 
standard,  have  voted  for  that  standard,  when  silver  was  worth 
more  than  gold,  or  as  much,  at  the  existing  coining  ratios,  and 
when  the  prospects  were  that  the  interests  of  the  creditor 
would  be  best  subserved  by  the  payment  of  obligations  in  sil- 
ver. Moreover,  one  of  the  avowed  purposes  of  monetary  union, 
to  effect  which  this  conference  labored,  was  to  free  commerce 
largely  of  the  operations  of  the  money-changer. 

Having  thus  decided  the  question  of  the  standard,  fixed 


86  THE  CONFERENCE  OF  1867 

the  5-franc  piece,  nine-tenths  fine,  as  the  common  denomina- 
tor, determined  that  international  types  of  coinage  should  have 
legal  currency  within  the  union,  and  proposed  future  diplo- 
matic conventions  to  regulate  details,  it  was  not  strange  that 
most  of  the  delegates  separated  in  the  expectation  that  mone- 
tary unity  throughout  the  civilized  world  was  soon  to  be  real- 
ized, even  if  the  position  of  England  and  the  German  states 
was  somewhat  enigmatical.  ^Napoleon  III.  might  well  be 
pardoned  having  bright  visions  of  a  victory  of  peace,  carrying 
the  name  of  Napoleon  and  the  coins  and  influence  of  imperial 
France  more  widely  into  the  world  than  all  the  victories  at 
arms  of  Napoleon  the  Great. 

But  the  year  1867  with  Xapoleon  III.  was  something- 
like  the  year  180Y  with  his  renowned  uncle.  It  marked  the 
turn  in  the  tide  of  his  fortune. 


CHAPTER  III 

CHANGES  IN  COINAGE  LAWS  AMD  MINT  REGULATIONS  —  THE  DEMONETIZA- 
TION OF  SILVER 

SEPARATING  thus,  in  the  hope  and  belief  that  a  uniform  in- 
ternational coinage  could  be  practically  brought  about,  the 
continued  agitation  of  the  subject  by  the  delegates  in  their 
several  countries,  with  some  attempts  at  governmental  action, 
naturally  followed.  The  literary  campaign  became  livelier 
than  ever.  Articles  upon  the  question  from  the  pens  of  lead- 
ing authorities  appeared  in  the  financial  and  economic  re- 
views of  nearly  every  country  in  Europe.  In  England  there 
were  notable  papers  by  W.  Stanley  Jevons,  on  the  condition 
of  the  metallic  currency  of  the  United  Kingdom  with  refer- 
ence to  the  question  of  international  coinage;  by  Ernest  Seyd, 
on  foreign  exchanges,  with  a  defence  of  the  double  standard 
for  a  proposed  system  of  universal  coinage;  by  Walter  Bage- 
hot,  giving  a  plan  for  assimilating  the  English  and  American 
money  as  a  step  towards  a  universal  money;  and  by  others. 
The  French  writers  quickly  became  engaged  in  a  controversy 
over  the  question  of  standards.  Parieu  earnestly  and  enthu- 
siastically defended  the  decision  of  the  conference,  and  for  a 
time  his  position  was  supported  by  a  majority  of  the  ablest 
economic  and  financial  writers.  On  the  other  hand,  Cernuschi 
and  Wolowski  ably  argued  for  the  retention  of  the  double 
standard,  and  they  were  supported  by  a  few  of  the  leading 
financiers,  particularly  by  those  connected  with  the  Bank  of 
France.  In  Germany,  economic  opinion  was  almost  entirely 
for  gold.  Dr.  Soetbeer,  Xeller,  Bamberger,  and  a  score  of 
others  discussed  the  reform  of  the  nation's  currency  in  all  its 


88  THE  DEMONETIZATION  OP  SILVER 

phases;  seldom  has  any  economic  topic  been  so  thoroughly  de- 
bated, and  the  controversy  centred  largely  upon  the  subject 
of  the  standard  of  value,  except  in  the  United  States,  where 
there  was  no  controversy  at  all  as  to  the  desirability  of  inter- 
national uniformity  in  coinage  or  of  the  standard  of  gold; 
every  one  who  considered  the  matter  desired  both.  The  words 
"  coin  "  and  "  gold  "  were  practically  synonymous  in  this  coun- 
try when  paper  was  the  currency. 

France,  for  some  little  time  after  the  conference,  simply 
used  her  diplomacy  to  encourage  efforts  for  unity  among  other 
governments,  before  taking  definite  steps  to  modify  her  own 
system  to  conform  to  the  decision  of  the  delegates.  A  pre- 
liminary treaty  was  arranged  with  Austria,  not  a  difficult  mat- 
ter, as  Baron  de  Hock  had  already  prepared  its  terms  in  an- 
ticipation of  the  results  of  the  conference,  and  as  the  4-floriri 
piece  was  the  exact  equivalent  of  the  10-franc  piece  of  the 
Latin  Union.  Austria  was  also  anxious  to  resume  specie  pay- 
ments, and  was  politically  inclined  to  ally  herself  to  France, 
since  the  Germans  had  drawn  towards  Prussia,  where  Bis- 
marck's vigorous  policy  was  rapidly  forming  a  new  empire 
in  a  manner  somewhat  disagreeable  to  Napoleon.  Spain  came 
into  the  Latin  Union  in  1868  as  a  result  of  diplomatic  over- 
tures. 

The  French  government  soon  became  aware  that  not  the 
least  difficult  part  of  its  programme  would  be  to  obtain  a  legis- 
lative endorsement  of  the  gold  standard.  "With  the  prestige 
of  the  conference,  the  government  thought  French  opinion 
would  be  modified,  but  a  commission,  appointed  in  1867,  de- 
clared against  the  adoption  of  the  gold  standard.  In  view  of 
the  developing  opposition  to  a  change  in  the  system,  the  gov- 
ernment called  into  being  a  larger  and  more  imposing  commis- 
sion, the  majority  of  whom  were  known  to  be  in  favor  of  gold. 
It  went  through  the  forms  of  an  inquiry.  Advocates  of  the 
gold  standard  strongly  pleaded  its  cause,  restating  the  various 


FRENCH  FINANCIERS  OPPOSE  MONOMETALLISM  89 

arguments  in  its  favor  —  the  plentifulness  of  gold,  the  general 
sentiment  for  its  adoption  as  a  common  standard,  the  danger 
to  France  unless  the  government  acted  quickly  and  avoided 
the  difficulties  of  entering  the  procession  late,  and  the  fact  that 
the  states  of  the  North  German  Union  had  practically  deter- 
mined to  adopt  the  standard.  The  idea  was  also  advanced 
that,  both  metals  having  depreciated,  one  of  them  should  be 
demonetized  so  as  to  assure  the  value  of  the  standard.  But  the 
Bank  of  France  strongly  opposed  the  proposal.  Rouland,  the 
Governor  of  the  bank,  said  to  the  commission :  "  We  have  not 
to  do  with  ideal  theories.  The  two  moneys  have  actually  ex- 
isted since  the  origin  of  human  society.  They  co-exist  because 
the  two  together  are  necessary  by  their  quantity  to  meet  the 
needs  of  circulation.  This  necessity  of  the  two  metals,  has  it 
ceased  to  exist?  Is  it  established  that  the  quantity  of  actual 
and  prospective  gold  is  such  that  we  can  now  renounce  the  use 
of  silver  without  disaster?"  Baron  Rothschild,  one  of  the  re- 
gents, was  equally  strong  in  opposition,  and  held  that  suppres- 
sion of  silver  would  amount  to  a  veritable  destruction  of  values 
without  any  compensation,  for  the  alleged  inconveniences  of  a 
lack  of  uniformity  in  coins  he  considered  a  trifling  matter. 
But  Napoleon  was  determined,  and  his  commission  declared 
by  a  vote  of  17  to  6  for  gold.  This  was  in  the  summer  of 
1869. 

Overtures  were  made  to  Germany,  but  Bismarck,  as  coolly 
as  before,  requested  his  minister  at  Paris  to  say  that  the  politi- 
cal programme  arranged  in  Germany  embraced  also  the  sub- 
ject of  coinage,  and  it  would  be  necessary  to  await  the  devel- 
opments of  the  programme  before  considering  negotiations 
with  other  powers.  But  while  the  Chancellor  was  keeping  his 
counsels  to  himself,  the  commercial  organizations  all  over  Ger- 
many were  continuing  an  agitation  for  the  Paris  programme. 
At  the  organization  of  the  Handelstag,  a  convention  of  Cham- 
bers of  Commerce  in  the  different,  cities,  as  early  as  1861,  the 


90  THE  DEMONETIZATION  OF  SILVER 

German  governments  had  earnestly  recommended  the  adop- 
tion of  measures  to  secure  monetary  unity,  and  it  was  repeated 
in  1865,  while  the  organization  was  kept  up  by  a  permanent 
committee  of  fifteen,  of  which  Dr.  Soetbeer  was  chairman. 
This  committee  had  from  the  first  advocated  the  establishment 
of  the  gold  standard  as  a  primary  step  for  the  desired  unity, 
and,  at  the  fourth  convention  at  Berlin  in  October,  1868,  Dr. 
Soetbeer  introduced  resolutions  declaring  that  "  monetary 
unity,  and  at  the  same  time  such  a  general  reform  as  befits 
the  age,  can  be  brought  about  by  the  adoption  at  the  same  time 
by  all  the  German  states  of  the  single  gold  standard  with  the 
full  application  of  the  decimal  system,  in  pursuance  of  the 
principles  recommended  by  the  International  Monetary  Con- 
ference of  Paris  in  its  report  of  the  6th  of  July,  1867."  Spe- 
cial attention  was  called  to  a  proposition  to  introduce  a  unit  of 
value  and  of  account  equivalent  to  the  gold  5-franc  piece  with 
its  decimal  multiples  and  its  division  into  100  shillings  ;  or 
to  adopt  for  the  unit  the  gulden  as  the  tenth  part  of  a  principal 
gold  coin  identical  with  the  2  5-franc  piece,  and  divided  into 
100  kreuzers.  The  scheme  of  unifying  the  coinage  of  the  peo- 
ple by  a  reckoning  by  marks  as  the  third  of  a  thaler  was  dis- 
tinctly discarded  as  unscientific,  even  if  better  adapted  to  the 
habits  of  the  people;  yet  this  was  the  scheme  which  Bismarck, 
as  a  practical  politician,  was  inclined  to  favor,  and  which  was 
eventually  adopted  with  some  modifications.  At  this  conven- 
tion in  1868,  the  Handelstag  petitioned  the  North  German 
Union  and  the  governments  of  Bavaria,  Wiirtemberg,  Baden, 
and  Hesse  to  take  appropriate  steps  without  delay  for  transi- 
tion to  the  gold  standard,  so  that,  if  possible,  it  might  go  into 
effect  by  January  1,  1872,  at  the  latest.  Had  not  political 
conditions  changed,  it  seems  entirely  probable  that  Germany 
would  have  adopted  the  plan  of  the  conference.  Its  steps  were 
all  in  that  direction.  Even  late  in  1860,  Walter  Bagehot, 
writing  of  the  Xorth  German  Union,  said :  "  Germany  has  a 


GERMANY  AND  THE  PARIS  PLAN  91 

currency  to  choose;  none  of  her  many  currencies  which  have 
descended  from  her  divided  states  are  fit  to  be  her  exclusive 
currency  now  that  she  is  one.  If  things  remain  as  now,  she  is 
sure  to  adopt  the  French  currency ;  already  there  is  a  proposal 
in  the  Federal  Parliament  that  she  should  take  it."  l  In  June, 
1870,  or  a  month  before  the  Spanish  throne  afforded  a  pretext 
for  hostilities,  Prussia  appointed  a  commission  to  inquire  into 
the  best  means  of  adopting  a  gold  standard  for  the  allied  states. 

While  the  British  delegates  had  shown  little  zeal  for  a  gen- 
eral monetary  reform  at  the  conference,  the  commercial  opin- 
ion of  England  was  far  from  indifferent.  The  predominating 
desire  had  been  to  secure  the  pound  sterling  as  a  unit,  but  upon 
the  report  of  the  delegates  to  Lord  Stanley,  and  of  Professor 
Leone  Levi,  concerning  the  measures  advocated  by  the  inter- 
national committee,  the  agitation  in  favor  of  the  reduction  of 
the  value  of  the  pound  to  that  of  a  25-franc  piece  grew,  and  a 
parliamentary  commission  was  raised  to  inquire  into  the  sub- 
ject and  report  upon  the  feasibility  of  the  project. 

The  situation  in  the  United  States  was  unique,  and  should 
be  carefully  examined.  The  action  of  the  Paris  conference  ex- 
cited little  interest  among  a  people  who  were  preparing  for 
themselves  a  fresh  disaster  by  an  overindulgence  in  paper  in- 
flation, and  were  absorbed  in  grave  questions  over  the  recon- 
struction of  a  recently  rebellious  section,  while  the  party  in 
power  was  engaged  in  a  struggle  with  a  President  which  nearly 
ended  in  his  impeachment.  The  subject  of  monetary  union 
was  kept  alive  only  by  diplomatic  steps  which  for  more  than 
a  year  failed  to  attract  the  notice  of  Congress.  Delegate  Rug- 
gles  maintained  his  interest  and  enthusiasm,  bringing  the  mat- 
ter to  the  attention  of  the  State  Department  regularly.  In  a 

i  "  Universal  Money."  Some  bimetallic  writers  have  made  the 
mistake  of  citing  this  as  evidence  that  Germany  proposed  to  adopt 
the  double  standard.  The  proposal  was  to  adopt  the  French  sys- 
tem as  modified  by  the  conference  of  1867  —  a  gold  standard. 


92  THE  DEMONETIZATION  OF  SILVER 

communication  to  Secretary  Seward  shortly  after  the  adjourn- 
ment of  the  conference  he  spoke  of  the  unanimity,  not  only  in 
the  conference,  but  in  the  international  committee,  which,  he 
said,  acted  independently,  for  the  general  abolition  of  the 
double  standard.  In  reply  to  a  note  from  Minister  Berthemy 
in  September,  notifying  this  government  that  France  was  seek- 
ing to  carry  out  the  plans  of  the  conference  and  would  be 
pleased  to  receive  a  reply  from  the  United  States,  Secretary 
Seward  replied  that  the  matter  was  already  being  examined 
by  the  Secretary  of  the  Treasury  and  would  receive  prompt  at- 
tention. A  few  days  later  McCulloch  wrote  to  Seward  that 
the  idea  of  the  conference  had  his  approval  and  concurrence 
and  that  he  would  present  the  question  to  Congress  in  Ko- 
vember.  It  would  have  been  futile  to  have  asked  that  body 
to  take  the  matter  up  in  1867,  when  it  was  assembling  repeat- 
edly, only  with  a  view  of  checking  the  President  and  defeating 
his  plans,  and  it  was  not  till  November  that  Ruggles  finally 
submitted  his  formal  report. 

He  spoke  of  the  composition  and  character  of  the  confer- 
ence, whose  delegates  represented  a  population  of  320,000,000 
souls,  and  of  the  importance  of  embracing  in  a  monetary  union, 
so  much  desired,  the  South  American  states.  The  cost  of  re- 
coinage  required  by  the  proposed  unification,  he  maintained, 
would  be  more  than  met  by  the  saving  to  commerce  in  the 
charges  of  money-changers.  There  were,  he  said,  scattered 
through  the  different  nations  of  Europe  and  along  their  fron- 
tiers at  least  5000  money-changers  and  their  employes,  gain- 
ing a  living  by  changing  the  coins  of  the  various  countries  of 
the  world.  Even  supposing  that  there  were  but  2000  of  them, 
and  that  they  earned  each  only  $1000  a  year,  it  would  amount 
to  $2,000,000,  which  commerce  would  save,  and  which  would 
go  far  towards  the  payment  of  all  the  necessary  recoinage. 
In  speaking  of  the  plans  for  unification  he  referred  to  the  mat- 
ter of  the  standard  of  value  in  this  way : 


A  BILL  FOR  UNIFICATION  IN  CONGRESS  93 

"  The  establishment  of  the  single  standard  exclusively  of  gold 
Is,  In  truth,  the  cardinal,  if  not  the  "all-important,  feature  of  the 
plan  proposed  by  the  conference,  relieving  the  whole  subject,  by 
u  single  stroke  of  the  pen,  from  the  perplexity  and,  indeed,  the  im- 
possibility of  permanently  unifying  the  multiplicity  of  silver  coins 
scattered  through  the  various  nations  of  Europe.  It  is  a  matter 
of  world-wide  congratulation  that  on  this  vital  point  the  delegates 
from  the  nineteen  nations  represented  in  the  conference  were  unani- 
mous, not  excepting  France  itself,  so  strongly  wedded  by  its  na- 
tional tradition  to  the  double  standard." 

He  fully  explained  the  reasons  that  had  actuated  the  dele- 
gates in  considering  the  system  of  the  Latin  Union  the  best  as 
a  basis  for  unification,  and  why  the  majority  had  preferred  the 
gold  5-franc  piece  as  a  common  denominator,  which  would 
not  only  make  the  dollars  of  the  United  States,  when  reduced 
by  a  new  coinage,  convertible  into  5-franc  pieces,  but  France 
had  agreed  at  his  "  earnest  solicitation,"  to  coin  a  2  5-franc  piece 
to  correspond  with  our  half-eagle,  and,  he  hoped,  with  a  modi- 
fied sovereign.  The  report  was  fully  analyzed  by  the  Secretary 
of  the  Treasury,  McCulloch,  in  his  report  at  the  assembling 
of  Congress,  and  attracted  enough  attention  to  be  asked  for  by 
the  Senate  and  printed  as  one  of  its  documents,  so  that  that 
body  was  abundantly  aware  of  what  was  going  on  in  reference 
to  the  standard  value.  The  logic  of  events  leads  naturally 
and  directly  up  to  the  Act  of  1873,  acquiesced  in,  neither  in 
ignorance  nor  through  "  hypnotism,"  by  nearly  everybody  in 
Congress  and  out. 

On  January  6,  1868,  or  a  few  days  after  the  Ruggles  re- 
port was  submitted  to  the  Senate,  Senator  Sherman  introduced 
a  bill  (No.  217)  to  carry  out  the  proposed  plan  of  unification 
so  far  as  it  could  be  done  by  the  United  States.  l  It  chiefly 

i  The  bill  in  full  was  as  follows: 

"  Be  it  enacted  by  ihe  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled: 

"  That,  with  a  view  to  promote  a  uniform  currency  among  the  na- 
tions, the  weight  of  the  gold  coin  of  $5  shall  be  one  hundred  and 
twenty-four  and  nine-twentieths  troy  grains,  so  that  it  shall  agree 
with  a  French  coin  of  25  francs,  and  with  the  rate  of  thirty-one  hun- 
dred francs  to  the  kilogramme;  and  the  other  sizes  or  denominations 


94  THE  DEMONETIZATION  OP  SILVER 

provided  for  the  reduction  of  the  gold  coins  to  conform  to 
French  gold  coins,  and  also  for  reducing  the  weight  of  the 
fractional  silver  coins  to  the  French  valuation,  while  discon- 

sliall  be  in  due  proportion  of  weight,  and  the  fineness  shall  be  nine- 
teuths  or  i)00  parts  fine  in  1000. 

"  Sec.  2.  And  be  it  further  enacted,  That  in  order  to  conform  the 
silver  coinage  to  this  rate  and  to  the  French  valuation,  the  weight  of 
the  half-dollar  shall  be  179  grains,  equivalent  to  110  decigrammes; 
and  the  lesser  coins  be  in  due  proportion,  and  the  fineness  shall  be 
nine-tenths.  But  the  coinage  of  silver  pieces  of  one  dollar,  five 
cents,  and  three  cents  shall  be  discontinued. 

"  Sec.  3.  And  be  it  further  enacted,  That  the  gold  coins  to  be  is- 
sued under  this  act  shall  be  a  legal  tender  in  all  payments  to  any 
amount;  and  the  silver  coins  shall  be  a  legal  tender  to  an  amount 
not  exceeding  ten  dollars  in  any  one  payment. 

"  Sec.  4.  And  be  it  further  enacted,  That  in  the  assay  of  the  gold 
coins  to  be  issued  under  this  act  there  shall  be  no  greater  deviation 
allowed  from  the  standard  of  fineness  than  one-thousandth  part 
above  or  below. 

"  Sec.  5.  And  be  it  further  enacted,  That  the  devices  on  the  coins 
shall  consist  of  such  emblems  and  inscriptions  as  are  proper  to  the 
republic  of  the  United  States,  but  plainly  distinct  from  those  now 
in  use;  each  coin  shall  express  its  proper  date  and  value;  and  the 
value  of  the  gold  coins  shall  be  stated  both  in  dollars  and  in  francs; 
and  whenever  it  is  ascertained  that  Great  Britain  has  conformed 
the  pound  sterling  to  the  value  of  the  piece  of  $5,  then  the  value  in 
British  terms  shall  also  be  stated;  and  the  devices  as  well  as  the 
diameters  of  the  coins  shall  be  fixed  by  the  Director  of  the  Mint, 
under  the  control  of  the  Secretary  of  the  Treasury. 

"  Sec.  G.  And  be  it  further  enacted,  That  foreign  gold  coins,  con- 
formed to  the  basis  herein  prescribed,  shall  be  a  legal  tender  in  all 
payments  whatsoever,  so  long  as  the  standards  of  weights  and  fine- 
ness are  duly  maintained;  and  it  shall  be  the  duty  of  the  commis- 
sioners of  assay,  meeting  at  the  mint  in  the  month  of  February  of 
each  year,  to  try  a  sufficient  number  of  such  foreign  coins  of  the  pre- 
ceding year,  to  be  procured  for  that  purpose  by  the  Director  of  the 
Mint,  and  if  any  serious  deficiency  be  found,  the  Secretary  of  the 
Treasury  shall  have  power  to  suspend  the  right  of  legal  tender  in 
the  particular  case. 

"  Sec.  7.  And  be  it  further  enacted,  That  when  the  gold  and  silver 
coins  of  the  United  States  are  brought  to  the  mint  or  its  branches 
for  recoinage,  such  coins  shall  be  received  by  weight,  and  those 
of  them  which  have  been  issued  as  nine-tenths  fine  shall  be  so  re- 
ceived, but  all  others  by  assay.  And  in  payments  at  the  mint  for 
both  gold  and  silver  coins  above  specified,  the  value  shall  be  ren- 
dered according  to  the  weights  prescribed  in  the  first  and  second 
sections  of  this  act,  and  there  shall  be  no  charge  for  coinage,  seign- 
iorage, or  internal  revenue;  and  on  all  other  deposits  of  gold  for  coin- 
age tlie  charge  shall  be  one-half  of  1  per  cent. 

"Sec.  8.  And  be  it  further  enacted.  That  for  the  uses  of  the 
Treasury  and  the  custom-houses,  the  Secretary  of  the  Treasury  shall, 
as  soon  as  this  act  takes  effect,  publicly  declare  the  rates  at  which 


"THE  OHIO  IDEA"  95 

tinning  the  coinage  of  the  silver  dollar.  Thus  the  right  to 
coin  the  dollar  under  the  law  was  admitted,  but  its  abandon- 
ment was  proposed  without  any  disguise.  There  was  no  secret 
about  it,  and  no  excuse  was  considered  necessary.  It  was  one 
of  the  best-advertised  features  of  this  whole  scientific  move- 
ment. The  other  sections  of  the  measure  were  designed  ob- 
viously for  no  other  purpose  than  to  accomplish  the  unification 
as  quickly  and  as  easily  as  possible.  Meantime  President 
Dumas,  of  the  French  commission  on  coins,  had  sent  to  Presi- 
dent Johnson  a  specimen  of  the  new  25-franc  piece  which  it 
was  proposed  to  have  the  mints  issue,  and  gave  other  assur- 
ances that  the  Emperor  was  intending  to  have  France  do  its 
part  in  furthering  the  common  object. 

It  was  about  this  time  that  an  idea  further  complicating 
affairs  in  this  country  seized  on  large  masses  of  voters,  es- 
pecially in  the  Western  States;  and  leaving  for  a  while  Senator 
Sherman's  bill  to  the  Finance  Committee,  to  which  it  was  re- 
ferred, and  of  which  he  was  chairman,  it  will  be  well  to  con- 
sider briefly  this  idea,  which  was  for  the  practical  repudiation 
of  the  public  debt,  amounting  then  to  about  $2,500,000,000. 
While  the  subject  may  not  pertain  directly  to  the  development 
of  international  action,  it  has  a  bearing  on  it,  our  bonds  being 

the  coins  of  the  United  States  and  of  foreign  countries  now  cur- 
rent shall  be  reckoned  upon  estimates  furnished  by  the  Director 
of  the  Mint. 

"  Sec.  9.  And  be  it  further  enacted.  That  this  act  shall  take  effect 
on  the  1st  day  of  January.  1800,  but  to  expedite  the  recoinage  it 
shall  be  lawful  for  the  mint  and  its  branches  to  receive  gold  and 
silver  coins  of  the  United  States  for  that  purpose  on  and  after  the 
1st  day  of  October  next,  and  to  give  certificates  therefor,  payable 
in  the  order  of  receipt  in  the  new  coins,  and  to  convert  the  metals 
thus  received  into  ingots  and  planchets  to  be  ready  for  stamping1 
when  this  act  takes  effect.  And  in  respect  to  other  deposits  of  gold 
or  purchases  of  silver,  the  like  certificates  may  be  issued  if  de- 
manded, on  and  after  the  first  day  of  October  next. 

"  Sec.  10.  And  ftp  it  further  enacted.  That  the  weights  to  be  used 
at  the  mint,  when  this  act  goes  into  operation,  may  be  either  troy 
weights  or  French  gramme  weights,  or  both,  as  the  Secretary  of  the 
Treasury  shall  direct." 


96  THE  DEMONETIZATION  OF  SILVER 

so  extensively  held  abroad,  and  as  showing  the  temper  of  Con- 
gress on  financial  topics  at  this  very  important  period.  The 
burden  of  the  debt,  of  course,  seemed  heavy,  and  it  created  a 
choice  opportunity  for  demagogues.  Few  openly  advocated 
repudiation,  but  it  was  generally  brought  forward  in  the  shape 
of  the  payment  of  the  u  five-twenties  "  by  greenbacks,  which 
were  then  not  redeemable  in  gold  and  were  greatly  depre- 
ciated. Some  advocated  the  taxation  of  the  bonds.  The 
Democrats  espoused  these  plans  under  the  leadership  of  Pen- 
dleton,  and  even  Republicans  in  the  West  were  carried  away 
by  what  was  known  as  '"  the  Ohio  idea."  Such  men  as  Henry 
C.  Carey,  William  D.  Kelley,  and  Thaddeus  Stevens,  of  Penn- 
sylvania, opposed  any  contraction  of  the  currency  as  a  step 
towards  resumption,  the  last  words  of  Stevens,  in  the  House, 
a  month  before  his  death,  being  for  the  payment  of  the  "  five- 
twenties  "  in  paper  money.  Even  Senator  Sherman  made  a 
speech  on  February  27, 1868,  in  which  he  maintained  the  legal 
right  of  the  government  to  redeem  the  principal  of  the  debt 
in  paper,  though  denying  the  right  to  make  a  new  issue  for 
the  purpose  and  questioning  the  wisdom  of  such  a  financial 
policy,  and,  in  view  of  his  position,  it  created  much  anx- 
iety abroad,  where  it  was  naturally  difficult  to  reconcile  such  a 
principle  with  the  professed  desire  of  the  United  States 
to  resume  specie  payment  and  to  establish  a  uniform  money 
on  a  gold  standard.  It  was  at  about  this  time  that  Congress 
suspended  the  authority  of  the  Secretary  to  retire  treasury 
notes.  But  the  strong  defenders  of  the  national  credit  in  both 
branches  of  Congress  quickly  brought  the  Republican  party, 
or  the  majority  of  it,  to  a  realizing  sense  of  the  impossibility  of 
resumption  under  such  theories,  and  finally  secured  the  Act  of 
1869,  pledging  the  United  States,  in  all  cases  where  the  word- 
ing of  the  contract  admitted  of  doubt,  to  payment  in  coin  or 
its  equivalent,  of  all  public  obligations,  and  also  declaring 
that  treasurv  notes  should  be  redeemed  in  specie  before  the 


SHERMAN  URGES  UNIFICATION  MEASURE  97 

payment  of  any  part  of  interest-bearing  obligations  not  due  at 
the  date  of  the  act.  It  was  entitled  "  An  Act  to  Strengthen  the 
Public  Credit,"  and  it  unquestionably  had  that  needed  effect. 

"While  this  conflict  was  in  progress,  June  9,  18 G8,  Senator 
Sherman  reported  favorably  from  his  committee  the  bill  "  to 
promote  a  uniform  currency  among  the  nations,"  advocating 
its  passage  in  a  strongly  written  report.  In  it  he  said  that  the 
same  reasons  for  adopting  an  international  standard  of  value 
"  now  exist  as  induced  the  American  colonies  less  than  one  hun- 
dred years  ago  to  abandon  their  diversified  standards  of  value 
and  adopt  as  a  common  unit  the  American  dollar.  Every  ad- 
vance towards  a  free  exchange  of  commodities  is  an  advance  in 
civilization.  Every  obstruction  to  a  free  exchange  is  born  of 
the  narrow,  despotic  spirit  which  planted  castles  upon  the 
Rhine  to  plunder  peaceful  commerce.  Every  obstruction  to 
commerce  is  a  tax  upon  consumption;  every  facility  to  a  free 
exchange  cheapens  commodities,  increases  trade  and  produc- 
tion, and  promotes  civilization.  Nothing  is  worse  than  sec- 
tionalism within  a  nation  and  nothing  is  better  for  the  peace 
of  nations  than  unrestricted  freedom  of  intercourse  and  com- 
merce with  each  other."  In  this  language,  used  as  a  general 
reason  for  international  uniformity  of  coins,  we  get  a  glimpse 
of  the  prevailing  sentiment  for  a  wider  family  of  nations  — 
internationality  \vas  a  sort  of  scientific,  economic,  almost  a 
political  fad. 

One  reason  the  senator  gave  why  such  a  union  would  be 
profitable  to  this  country  was  that  it  was  gold-producing,  and 
another  was  that,  being  a  new  nation,  we  were,  therefore,  a 
debtor  nation,  and  by  placing  ourselves  in  harmony  with  the 
monetary  units  of  creditor  nations,  the  easy  borrowing  of 
money  for  resumption  purposes  was  promoted ;  besides,  it  per- 
mitted the  payment  of  debts  without  the  loss  from  recoinage 
or  of  exchange,  always  paid  by  the  debtor.  The  committee 
also  regarded  the  plan  proposed  by  the  Paris  conference  as  the 
7 


98  THE  DEMONETIZATION  OF  SILVER 

best  to  accomplish  the  desired  end.  "  The  single  standard  of 
gold,"  he  said,  "  is  an  American  idea,  yielded  reluctantly  by 
.France  and  other  countries  where  silver  is  the  chief  standard 
of  value.  The  impossible  attempt  to  maintain  two  standards  of 
value  has  given  rise  to  nearly  all  the  debasement  of  coinage 
of  the  last  two  centuries.  The  relative  market  value  of  silver 
and  gold  varied  like  other  commodities,  and  this  led  first  to 
the  demonetization  of  the  more  valuable  metal,  and  second 
to  the  debasement  or  diminution  of  the  quantity  of  that  metal 
in  a  given  coin."  The  committee,  he  said,  recommended 
the  5-franc  unit  because  it  was  the  smallest  gold  coin  in  use, 
and,  therefore,  the  most  convenient  unit ;  it  approximated  more 
nearly  to  the  existing  coinage  of  the  great  commercial  nations 
that  any  other,  the  franc  being  already  in  use  by  70,000,000 
people  in  Europe,  and  easily  adapted  to  the  existing  coin- 
ages of  other  nations.  The  Secretary  of  the  Treasury  and 
the  Director  of  the  Mint  had  been  consulted  concerning  the 
bill,  the  report  added,  and  there  were  positive  assurances  that 
other  nations  would  adopt  the  system.  "  A  strong  party  in 
Great  Britain,  including  many  of  her  ablest  statesmen  and 
the  great  body  of  her  commercial  classes,  has  urged  the  adop- 
tion of  the  plan  even  in  advance  of  the  United  States."  South 
American  states  had  also  expressed  a  purpose  to  adopt  it. 

The  zeal  of  the  committee  in  appropriating  the  gold  stand- 
ard as  an  American  idea,  and  of  claiming  that  it  had  been 
yielded  reluctantly  by  France  and  other  nations,  is  difficult  to 
understand  except  on  the  theory  that  it  was  a  popular  thing  in 
this  country  then  to  claim  as  much  as  possible  of  responsibility 
for  that  policy.  It  was  convenient  for  France  to  have  some- 
thing to  yield,  if  only  for  effect,  but  she  was  required  to  make 
very  little  use  of  this  ammunition,  for,  as  already  observed,  the 
other  nations  were  quite  as  ready  to  adopt  the  French  unit  as 
they  were  to  adopt  the  gold  standard.  This  statement  in  the 
committee's  report  was  used  by  the  silver  advocates  years  later 


NEW  YORK  PLEADS  FOR  SILVER  99 

in  an  effort  to  substantiate  the  absurd  claim  that  silver  was 
demonetized  by  the  stealthy  acts  of  men  in  this  countryj  used 
by  those  who  were,  in  the  sixties,  quite  as  pronounced  in  their 
eulogies  of  the  gold  standard  as  any  one. 

The  objections  to  the  discontinuance  of  the  coinage  of  the 
silver  dollar  did  not  come  from  the  mining  states  in  those  days, 
but  from  commercial  centres  like  New  York  city.  The 
minority  report  on  the  bill  was  written  by  Senator  E.  D.  Mor- 
gan, of  New  York,  who  for  years  was  at  the  head  of  one  of  the 
large  commercial  houses  of  that  city.  But  he  did  not  base 
his  objections  on  the  ground  that  it  was  better  to  have  a 
double  standard.  He  said:  "  The  reduction  which  this  measure 
would  effect  in  the  present  legal  standard  value  of  the  gold 
coin  of  the  United  States  would  be  at  the  rate  of  $3.50  in  the 
hundred^  and  the  reduction  in  the  legal  value  of  our  silver 
coinage  would  be  still  more  considerable.  A  change  in  our 
national  coinage  so  grave  as  that  proposed  by  the  bill  should 

be  made  only  after  the  most  mature  deliberation 

The  United  States  has  a  peculiar  interest  in  such  a  question. 
It  is  a  principal  producer  of  the  precious  metals,  and  its  geo- 
graphical position,  most  favorable  in  view  of  impending  com- 
mercial changes,  renders  it  wise  that  we  should  be  in  no  haste  to 
fetter  ourselves  by  any  new  international  regulation  based  on 
an  order  of  things  belonging  essentially  to  the  past." 

After  speaking  of  the  silver  mines  of  Nevada  and  our 
proximity  to  the  silver-producing  people  of  Mexico,  he  con- 
tinued : 

"  The  Pacific  Railway  will  open  to  us  the  trade  of  China,  Japan, 
India,  and  other  Oriental  countries  of  whose  prepossessions  we  must 
not  lose  sight.  For  years  silver,  for  reasons  not  fully  understood, 
has  been  the  object  of  unusual  demand  among  these  Asiatic  na- 
tions, and  now  forms  the  almost  universal  medium  of  circulation, 
absorbing  rapidly  the  silver  of  coinage.  The  erroneous  proportion 
fixed  between  silver  and  gold  by  France,  and  which  we  are  asked 
to  copy,  is  denuding  that  country  of  the  former  metal.  Our  own 
monetary  system,  thoiigh  less  faulty,  is  not  suitably  adjusted  in 
this  respect.  The  silver  dollar,  for  instance,  a  favorite  coin  of  the 


100  THE  DEMONETIZATION  OP  SILVER 

native  Indian  and  distant  Asiatic,  has  wellnigh  disappeared  from 
domestic  circulation,  to  reappear  among  the  Eastern  peoples  with 
whom  we,  more  than  ever,  seek  close  intimacy.  As  they  prefer  this 
piece,  we  do  well  to  increase,  rather  than  discontinue,  its  coinage." 

Nothing  was  said  by  Senator  Morgan  against  making  gold 
the  exclusive  standard  of  value.  He  considered  a  silver  dollar 
for  commerce  with  the  East  desirable,  and  here  we  have  the 
first  plain  suggestion  of  the  trade  dollar,  which  became  a  feat- 
ure of  the  law  of  1873.  He  argued,  further,  that  the  reduction 
of  the  value  of  gold  coins  was  a  movement  in  the  wrong  direc- 
tion, as,  owing  to  the  increased  abundance  of  gold  and  its  con- 
sequent decrease  in  value,  the  standard  of  coins  should  be 
raised  instead  of  lowered,  and  cited  the  opinion  of  Chevalier 
regarding  the  possible  necessity  of  demonetizing  the  yellow 
metal.  These  two  reports,  taken  in  connection  with  other  evi- 
dences, show  how  unsettled  in  its  view  was  the  monetary  world, 
following  a  long  period  of  remarkable  gold  production,  but 
Senator  Morgan's  opinion  was  shared  by  very  few  people  any- 
where at  that  time. 

The  bill  was  not  called  up  for  action,  the  Senate  as  well 
as  the  country  being  absorbed  in  other  matters,  one  of  which 
was  a  presidential  election.  In  July  Congress  adjourned  to 
meet  September  21,  but  before  its  adjournment  William 
D.  Kelley,  of  the  Committee  on  Ways  and  Means,  introduced  a 
bill  for  international  coinage,  proceeding  from  the  view,  unani- 
mously rejected  at  the  Paris  conference,  that  an  entirely  new 
monetary  system  should  be  adopted,  conforming  closely  to  the 
metric  system.  The  bill  provided  for  a  coin  of  the  nominal 
value  of  one  dollar,  but  weighing  If  grammes,  with  a  fine- 
ness of  .900,  or  containing  about  1^  grammes  of  fine  gold;  it 
also  provided  that  the  coin  should  be  rated  as  legal  currency  in 
the  United  States  from  January  1,  1869,  and  that  the  ratio  of 
exchange  should  be  $1000  of  the  old  coins  for  $1003  of  the 
new.  As  will  be  observed,  this  change  of  value  was  slight,  sim- 
ply bringing  the  weights  nearer  an  even  metrical  number,  with 


FRANCE  AND  ENGLAND  101 

less  decimal  figures,  but  leaving  the  coins  as  far  away  from 
those  of  any  other  system  as  they  were  before. 

Congress  reassembled  on  September  21,  and  the  same  day 
adjourned  to  October  16;  met  that  day,  and  at  once  adjourned 
to  November  10,  when,  on  reassembling,  the  second  session  at 
once  adjourned.  The  third  session  met  in  December,  and  did 
little  except  to  keep  a  watch  on  President  Johnson  till  March  4, 
when  the  Forty-first  Congress  and  President  Grant  came  in. 
Under  such  circumstances,  of  course,  there  was  little  thought 
of  international  coinage,  and  as  the  new  Congress  adjourned 
in  a  month  to  December,  nothing  could  be  done  in  the  way  of 
legislation  in  1869. 

Xow  let  us  glance  again  at  the  course  of  events  in  Europe 
while  the  Congress  of  the  United  States  was  thus  occupied. 
The  English  parliamentary  commission,  the  appointment  of 
which  has  been  mentioned,  and  of  which  Rivers  Wilson,  a  del- 
egate to  the  Paris  conference,  was  secretary,  made  an  exhaust- 
ive report  of  the  coinage  of  different  countries,  and  reviewed 
the  plans  which  had  been  proposed  to  unify  them  without  sug- 
gesting any  definite  course  for  Great  Britain,  except  by  so 
regulating  the  mint  charge  as  to  make  the  sovereign  the  equiva- 
lent of  the  proposed  French  25-franc  piece.  It  gave  opinions 
of  many  economists  favoring  seigniorage.  Shortly  afterwards 
the  French  government  wrote  to  the  English  Chancellor  of  the 
Exchequer,  Right  Honorable  R.  Lowe,  asking  what  steps  his 
government  would  take  for  unification.  He  replied  that 
until  he  knew  the  feeling  of  the  House  of  Commons  he  could 
give  no  exact  opinion.  All  he  could  say  in  advance  of  that 
was  that  it  would  be  impossible  to  hold  out  any  hopes  of  as- 
similation till  France  made  up  her  mind  to  have  only  the  gold 
standard,  her  double  standard  being  an  alternating  standard 
only,  and  if  her  silver  should  drive  out  her  gold  it  would  leave 
England  nothing  with  which  to  compare  her  international 
coins.  He  thought  also  that  it  would  be  impossible  to  have 


102  THE  DEMONETIZATION  OF  SILVER 

an  international  coinage  unless  the  seigniorage  charged  on  it 
were  identical  in  both  countries,  for  people  would  take  their 
gold  where  they  could  have  it  coined  the  cheapest.  In  reply  to 
this  France,  in  July,  1869,  sent  the  report  of  the  Imperial 
Commission,  showing  that  France  was  ready  to  abandon  the 
double  standard,  but  making  no  promises  as  to  seigniorage. 

In  bringing  the  subject  to  the  attention  of  Parliament,  in 
August,  1869,  the  Chancellor  said  he  believed  it  possible  for 
England  and  France,  if  they  could  make  up  their  minds  to  give 
up  a  little  of  their  prejudice  for  the  sake  of  having  an  inter- 
changeable coinage,  to  arrive  at  that  object.  If  Great  Britain 
would  impose  a  seigniorage  of  about  1  per  cent,,  the  sovereign 
would  be  identical  in  value  with  the  25-franc  piece.  "  But," 
he  said,  "  in  order  that  that  might  be  done,  France  would  have 
to  make  a  sacrifice  on  her  part.  I  believe  the  mintage  she 
charges  is  between  a  fifth  and  a  quarter  per  cent.  If  she  could 
be  prevailed  upon  to  make  it  1  per  cent.,  we  would  have 
solved  the  problem  so  far  as  England  and  France  are  concerned 
of  an  international  coinage.  The  operation  would  be  per- 
formed by  modifications  of  the  same  principle.  France  would, 
as  now,  take  the  payment  in  money;  England  would  deduct 
from  her  coin,  and  thus  equality  would  be  obtained."  He  fur- 
ther said  that,  in  his  opinion,  the  Spanish  doubloon,  the  Russian 
frederick,  and  the  half-eagle  of  America,  already  nearly  ap- 
proaching each  other  in  value,  could  be  brought  to  the  value  of 
the  proposed  sovereign  and  the  25-franc  piece,  and  that  it  would 
be  a  great  step  in  civilization.  Three  months  later  the  associa- 
tion of  Chambers  of  Commerce,  in  session  at  Birmingham, 
decided  unanimously  to  present  a  report  in  favor  of  the  inter- 
nationalization of  coinage  on  the  Paris  idea,  one  of  the  reasons 
advanced  being  that  other  nations  were  upon  the  point  of  form- 
ing a  powerful  monetary  union,  and  England  could  not  afford 
to  keep  out  of  it;  but  by  going  into  it,  possessing  the  most 
important  general  trade,  she  would  be  the  largest  gainer. 


BIMETALLISM  SUGGESTED  IN  HOLLAND  103 

Meanwhile  the  German  states  were  solidifying  under  the 
leadership  of  Prussia  more  rapidly  than  any  one  outside  of 
Germany  appreciated,  and  the  demand  for  monetary  reform 
became  stronger  daily.  The  Customs  Parliament  which  as- 
sembled in  Berlin  late  in  18G8,  and  which  was  the  first  repre- 
sentative body  of  the  entire  nation  that  had  yet  met,  though 
convoked  to  discuss  cotton  and  tobacco,  seemed  to  have  for  its 
real  object  the  paving  of  the  way  for  the  "  consummation  of 
the  national  destinies."  Money  was  fully  discussed,  and  the 
gold  standard  advocated. 

The  first  sales  of  silver,  with  the  gold  standard  in  view, 
were  made  in  Norway.  In  consequence  of  the  action  of  the 
conference  of  1867,  the  Bank  of  Norway  was  authorized  by  a 
law  passed  in  June,  1869,  to  change  its  reserve  into  gold,  and 
it  at  once  began  to  dispose  of  its  white  metal.  Sweden  had 
formed  a  monetary  commission  which  was  almost  unanimous 
for  gold,  and  which  eventually  brought  about  the  Scandinavian 
Union.  Holland  did  little.  Delegate  Mees  strongly  opposed 
the  idea  of  a  universal  gold  standard,  and  to  him  belongs  the 
honor,  from  a  bimetallic  point  of  view,  otherwise  the  discredit, 
of  first  suggesting  international  bimetallism.  In  the  confer- 
ence he  had  confessed  to  being  a  partisan  of  a  single  stand- 
ard for  each  particular  state,  while  against  the  same  standard 
for  all  states.  In  1869,  while  combating  the  double  standard 
as  it  had  been  practised  up  to  that  time,  within  a  limited  terri- 
tory, he  advocated  as  superior  to  any  other  system  a  universal 
double  standard,  claiming  that  the  moment  it  was  universal- 
ly accepted  the  two  metals  must  everywhere  conform  to  the 
common  legal  ratio.  But  he  confessed  that  it  did  not  seem 
possible  of  accomplishment. 

Thus  were  affairs  progressing  when  Napoleon  III.  be- 
came involved  in  serious  trouble.  His  impressionable  people 
contrasted  the  failure  of  imperialism  in  Mexico,  and  the 
forced  withdrawal  of  the  troops,  with  the  recent  successes  of 


104  THE  DEMONETIZATION  OP  SILVER 

Prussian  arms,  and  the  facility  with  which  the  smaller  states 
were  uniting  under  Prussia.  Bismarck's  efforts  to  form  alli- 
ances with  the  south  German  states  were  an  aggravation  to  the 
French,  who  began  to  waver  in  their  support  of  the  pacific  pol- 
icy of  Napoleon.  He  realized  that  something  must  be  done, 
but  was  reluctant  to  go  to  war  when  apparently  so  near  the 
realization  of  his  economic  dream.  He  proclaimed  changes  in 
the  constitution,  and  later  secured  the  plebiscite  of  the  spring 
of  1870,  by  which  the  people  were  called  upon  to  renew  their 
expressions  of  confidence  in  the  Napoleonic  rule.  They  did 
so  by  a  large  majority,  but  still  clamored  for  war  with  Bis- 
marck, who  was  doing  all  he  could  to  drive  the  French  people 
to  a  frenzy.  So  a  pretext  had  to  be  found,  the  war  came,  Na- 
poleon ingloriously  fell,  and  after  Sedan  few  hopes  of  inter- 
national coinage  were  left.  The  subject  was  first  obscured 
and  then  forgotten,  but  that  "  cardinal  principle,"  as  Kuggles 
expressed  it  —  the  gold  standard  —  continued  to  be  the  goal 
of  nations,  while  the  French  system  as  a  basis  dropped  out  of 
sight  and  out  of  mind. 

Enough  has  been  given  of  the  history  of  monetary  events 
up  to  this  time  to  show  the  mistake  of  assuming  that  the  result 
of  the  Franco-Prussian  war  changed  the  purpose  of  the  Ger- 
man states  regarding  the  standard  of  their  currency.  Both 
France  and  Germany  had  fully  intended  to  adopt  gold;  Ger- 
many did  so,  and  the  only  reason  France  did  not  was  that  she 
was  left  by  the  war  in  a  political  condition  which  allowed  her 
no  opportunity  to  consider  the  subject  till  it  was  too  late,  so  late 
that  her  monetary  condition  made  it  inadvisable,  if  not  impos- 
sible. Long  before  Napoleon  sent  his  challenge  to  Bismarck, 
or  before  the  candidacy  of  Prince  Leopold  of  Hohenzollern- 
Sigmaringen  for  the  Spanish  throne  was  announced,  the  states 
of  the  Latin  Union,  knowing  that  the  German  states  expected 
to  adopt  the  gold  standard  as  soon  as  possible,  began  to  con- 
sider the  advisability  of  adopting  it  first.  Napoleon,  hoping 


LATIN  UNION  URGED  TO  ACT  QUICKLY  105 

to  restrain  the  warlike  feelings  of  his  impetuous  people  until 
his  monetary  scheme  could  be  accomplished  with  other  na- 
tions, probably  thought  France  could  act  in  advance  of  Ger- 
many, even  if  the  states  became  united,  for  their  money  was 
on  a  silver  standard  and  complicated,  while  France  had  only  to 
go  through  the  formal  operation  of  dropping  silver  as  a  meas- 
ure of  value,  her  currency  being  already  almost  entirely  gold. 
So  from  the  date  of  the  adjournment  of  the  conference  up  to 
within  a  few  weeks  of  the  outbreak  of  the  war  he  sought  to 
carry  out  the  policy  of  unification  in  confidence  that  France 
could  quickly  adopt  the  necessary  measures  when  the  right 
moment  arrived.  If  he  could  wait  till  he  secured  the  adhesion 
of  England  or  the  United  States,  the  bimetallists  would  be 
more  easily  silenced. 

Even  in  1870,  when  war  seemed  inevitable,  France  was  not 
disposed  to  heed  the  clamor  that  some  of  the  other  representa- 
tives of  the  Latin  Union  were  making  for  the  immediate  adop- 
tion of  the  gold  standard.  About  two  months  before  the 
declaration  of  war,  Feer-Herzog,  the  eminent  Swiss  repre- 
sentative at  the  conference  of  three  years  before,  in  address- 
ing the  French  monetary  commission,  said:  "  There  are  two 
milliards  of  silver  in  Germany  and  Austria  demanding  that 
they  be  converted  into  gold,  because  the  states  which  possess 
them  are  resolved  to  adopt  the  gold  standard.  The  state  which 
demonetizes  first  will  do  so  with  but  little  loss,  while  the  state 
which  shall  have  hesitated  and  waited  will  undergo  the  losses 
resulting  from  the  demonetizations  which  have  preceded  its 
own,  and  so  will  pay  for  all  the  rest.  The  German  authors," 
he  added,  "  have  perfectly  understood  and  explained  the  ad- 
vantages which  will  accrue  to  their  country  from  acting  speed- 
ily, while  the  states  of  the  Latin  Union  still  hold  to  the  double 
standard." 

But,  if  we  accept  the  theory  of  Ernest  Seyd,  the  French 
commission  was  guided  by  different  motives.  He  said  in  ex- 


106  THE  DEMONETIZATION  OF  SILVER 

planation  of  the  action  of  the  commission  in  adopting  the  gold 
standard  that  the  influence  in  the  minds  of  the  majority  of 
the  members  "  was  entirely  political,  and  was  developed  \)j 
the  probability  of  a  war  with  Germany.  It  soon  became  evi- 
dent that  the  members  of  the  Imperial  Commission  had  a 
political  design,  that  they  had  in  view  the  forging  of  another 
weapon  against  Germany.  For  there  cannot  be  the  slightest 
doubt  that,  if  the  Emperor  had  beaten  Germany  and  exacted 
a  war  indemnity,  he  would  have  used  the  war  indemnity  for 
the  purpose  of  paying  for  the  adoption  of  the  gold  valuation 
and  weakened  Germany  further  by  the  demonetization  of  sil- 
ver." Seyd  says  that  from  personal  conversation  with  the 
members  of  the  commission  and  from  observation,  he  can 
vouch  for  the  fact  that  this  design  upon  Germany  was  under- 
lying the  inquiry  as  one  of  the  chief  though  not  avowed  mo- 
tives. 

Seyd  was  an  ardent  advocate  of  the  double  standard,  and 
his  knowledge  of  the  events  of  the  few  years  previous  seems  to 
have  deserted  him  at  this  point.  In  the  first  place,  the  French 
commission  had  adopted  the  gold  standard  long  before  the 
probability  of  a  war  with  Germany  could  have  supplied  the  mo- 
tive, and  had  so  informed  the  British  government.  In  the  next 
place,  France  was  very  differently  situated,  so  far  as  the 
adoption  of  that  standard  was  concerned,  from  Germany. 
Seyd  himself  gave  as  his  estimate  of  the  stock  of  coin  in 
the  states  of  Germany  before  1871,  about  $150,000,000  of 
gold  and  $380,000,000  of  silver.  On  the  other  hand,  France 
had  a  stock  of  gold,  according  to  the  estimates  of  the  best 
French  authorities  at  that  time,  amounting  to  $700,000,000, 
and  of  silver  amounting  to  only  $300,000,000.  Indeed, 
France  had  but  a  few  years  before  taken  steps  to  keep  sil- 
ver in  circulation;  her  total  coinage  of  5-franc  pieces  from 
1860  to  1870  had  not  amounted  to  more  than  150,000,000 
francs  (say  $32,000,000),  and  they  circulated  little  till  1867. 


PAYMENT  OF  FRENCH  INDEMNITY  107 

Now,  with  the  knowledge  that  both  countries  intended  to 
adopt  the  gold  standard,  and  assuming  that  France  had  been 
victorious,  it  is  clear  that  a  lot  of  German  silver  could  not 
have  helped  her  to  adopt  the  gold  standard,  except  incidentally 
in  the  reduction  of  her  public  debt,  and  any  indemnity  she 
could  have  exacted  from  Germany  would  have  no  more  than 
sufficed  to  have  paid  the  ordinary  expenses  of  the  war.  But 
to  go  to  a  gold  standard  Germany,  unlike  France,  needed  to 
buy  gold  and  sell  silver,  unless  she  could  take  the  gold  in  the 
shape  of  an  indemnity.  It  is  commonly  supposed  that  this 
was  exactly  what  she  did.  There  has  been  a  great  deal  of  loose 
talk  on  this  topic,  the  assumption  being  that  the  5,800,000,000 
francs  France  paid  over  to  the  conqueror  in  about  two  year? 
was  in  the  yellow  metal,  and  that  Germany  at  once  used  it  to 
institute  the  gold  standard.  As  a  matter  of  fact,  in  the  settle- 
ment of  the  indemnity  and  interest,  France  paid  Germany  but 
comparatively  little  specie,  about  one-tenth  of  the  whole,  and 
almost  one-half  of  that  tenth  was  in  silver.1  Germany  made 
no  net  gain  in  gold  till  she  began  to  sell  silver  in  1873,  when 
all  but  a  slight  remainder  of  the  indemnity  had  been  paid.  The 
French  payment  was  largely  a  transaction  in  credits.  There 
exists  in  Europe  a  system  of  international  payments  of  which 
very  little  seems  to  be  known  in  this  country.  If  a  Paris 
merchant  wishes  to  make  a  payment  in  Berlin,  he  usually 
sends  some  kind  of  securities  having  international  value  to 

i  Leroy-Beaulieu,  "  Traite  de  la  Science  des  Finances." 
"  The  fine  was  paid,  either  in  actual  specie  or  in  bills  of  exchange 
on  London  and  other  specie-paying  points.  France  borrowed  noth- 
ing abroad  wherewith  to  make  the  payment,  and  at  the  end  of  this 
vast  operation  is  found  to  be  possessed  of  as  much  gold  and  silver 
as  when  the  operation  began,  while  Germany  has  permanently 
gained  no  gold  and  silver  by  it."  —  Report  of  the  Silver  Commission 
of  1876. 

In  the  years  1871--3  the  net  loss  of  gold  in  France  was  about  $70,- 
000.000.  while  her  exports  of  silver  were  about  $50,000.000  greater 
in  those  three  years  than  in  the  three  years  previous  to  1871.  These 
figures  coincide  very  nearly  with  the  amount  of  gold  and  silver  act- 
ually paid  Germany. 


108  THE  DEMONETIZATION  OF  SILVER 

his  Berlin  agent,  where  they  are  sold  for  the  benefit  of  his 
creditor.  At  the  close  of  the  war  France  had  a  vast  amount  of 
foreign  credits.  This  foreign  paper  was  sent  abroad  to  secure 
funds  for  the  purchase  of  the  new  rentes,  the  transaction, 
therefore,  amounting  to  a  drawing  by  France  upon  her  foreign 
debtors  in  favor  of  Germany.1  Of  course,  it  was  at  first  a  hard 
blow  to  France,  for  it  deprived  her  of  a  vast  amount  of  the 
wealth  she  had  accumulated  through  her  commerce  and  the 
investments  of  her  domestic  industry,  but  it  did  not  exhaust 
her  specie,  and  in  one  year,  1874,  she  made  a  net  gain  of  gold 
larger  than  her  net  loss  during  the  three  years  1871--3. 

However  much,  therefore,  Bismarck  relied  on  the  indem- 
nity as  a  means  to  cripple  France,  Germany  did  not  adopt  the 
gold  standard  because  it  was  obtained.  Victory  hastened  the 
operation  which  Germany  had  long  contemplated,  largely  be- 
cause it  hastened  the  union  of  the  states,  but  it  did  not  make 
it  materially  easier.  The  indemnity  scarcely  more  than  paid 
the  German  expenses  of  the  war,  her  army  being  nearly  three 
times  as  large  as  that  of  France,  whose  expenses  in  the  brief 
struggle,  outside  of  the  indemnity,  were  about  4,000,000,000 
francs.  It  is  doubtful  if  Germany  really  gained  any  wealth 
except  in  the  territory  ceded  to  her.  Her  great  gain  was  the 
accomplishment  of  unity  after  so  many  struggles. 

A  departure  has  been  made  from  the  strict  chronological 
order  of  events  for  the  purpose  of  completing  without  inter- 
ruption a  brief  history  of  the  important  part  played  by  the 
Franco-German  war  in  the  collapse  of  the  scheme  of  interna- 
tional coinage,  and  the  inauguration  of  the  period  of  silver 
demonetization.  It  is  necessary  now  to  return  for  a  moment 
to  an  examination  of  steps  that  meanwhile  were  being  taken 
elsewhere  with  those  ends  in  view.  The  Forty-first  Congress 
sat  for  a  month  only  after  the  inauguration  of  President  Grant, 

i  Henry  C.  Adams.     "  Public  Debts." 


TUB  MINT  LAWS  OF  THE  UNITED  STATES  109 

March  4,  1869,  and,  as  has  been  stated,  did  nothing  with  the 
measures  for  conforming  our  coinage  to  that  of  the  Latin  Union 
originating  with  the  Fortieth.  The  new  Secretary  of  the 
Treasury  was  George  S.  Bout  well,  and,  as  soon  as  the  depart- 
ment was  fairly  organized,  the  matter  of  international  coinage 
was  brought  to  its  attention  by  those  who  were  deeply  inter- 
ested in  its  accomplishment.  It  has  been  said  that  Secretary 
Boutwell  was  not  inclined  to  favor  the  provisions  of  the  Sher- 
man bill,  drafted  in  accordance  with  the  plan  of  the  Paris  con- 
ference, but  preferred  the  Kelley  idea  of  fixing  the  dollar  as 
near  as  possible  to  a  metrically  even  number.  The  difficulty 
of  adjusting  contracts  under  a  change  so  great  as  the  Sherman 
bill  required  presented  itself  even  to  a  country  having  no 
specie  in  circulation. 

An  examination  into  the  question  by  the  Treasury  Depart- 
ment necessarily  involved  a  search  of  our  own  mint  laws,  and 
when  this  was  made  it  was  discovered  that  these  were  scattered, 
disconnected,  and  some  of  them  obsolete,  the  statutes  on  the 
subject  not  having  been  revised  for  over  thirty  years.  Consul- 
tation with  mint  experts  revealed  the  fact  that  the  Treasury 
really  had  no  authority  over  the  mint,  and  that  the  whole  sys- 
tem needed  to  be  modernized.  Naturally,  a  revision  of  these 
regulations,  putting  them  into  a  concise  and  practicable  form, 
not  only  to  meet  the  possibility  of  an  international  coinage, 
but  with  a  view  to  the  resumption  of  specie  payments,  appeared 
to  be  demanded  by  the  interests  of  the  government.  At  this 
task  the  authorities  set  to  work  under  the  general  supervision  of 
Secretary  Boutwell  and  the  immediate  control  of  the  Deputy 
Comptroller  of  the  Currency,  John  ,1.  Knox,  and  it  is  seldom 
that  anything  is  done  for  the  government  with  more  thorough- 
ness, or  that  efforts  are  made  to  secure  information  from  so 
wide  a  field. 

It  is  plain  enough  that  in  a  work  of  this  kind  the  main 
thing  at  first  was  to  bring  together  into  a  well-digested  whole 


HO  THE  DEMONETIZATION  OF  SILVER 

the  various  mint  regulations  enacted  at  different  times.  The 
proper  operation  of  the  mint,  whatever  the  character  of  the 
coinage,  would  naturally  take  precedence  of  any  other  ques- 
tion. The  matter  of  changing  the  value  of  the  dollar  with  a 
view  to  internationality  in  coinage  could  be  easily  determined 
later,  as  Congress  saw  fit  by  a  new  provision  in  the  revised 
draft,  or  perhaps,  a  slight  change  of  the  language.  The  State 
Department  was  carrying  on  a  correspondence  with  other  na- 
tions regarding  uniform  coinage  while  this  revision  was  in 
preparation.  But  there  were  certain  changes,  entirely  of  do- 
mestic concern,  both  as  to  the  operation  of  the  mint,  upon 
which  authorities  agreed,  or  as  to  coinage,  commended  by  com- 
mon consent,  which  were  introduced  in  the  original  draft,  nine- 
tenths  of  which  was,  however,  a  transcript,  with  slight  modifica- 
tions in  language  in  the  interests  of  conciseness,  clearness,  or 
consistency,  from  the  then  existing  mint  laws,  mainly  of  the 
law  of  1837.  When  completed,  late  in  1869,  the  draft  was 
sent  out  to  the  various  mint  officials  and  to  other  experts  for 
suggestions,  and  the  changes  made  were  specifically  noted.  The 
bill  met  general  approval ;  some  suggestions  were  made,  and  of 
these  some  were  adopted.  The  Comptroller  of  the  Currency 
prepared  an  elaborate  report  to  accompany  it,  enumerating 
the  changes  made  in  existing  laws,  and  under  sub-heads  care- 
fully explaining  the  character  of  each  change  and  the  reasons 
for  making  it,  and,  on  April  25,  the  bill  and  the  report  were 
together  transmitted  to  Senator  Sherman  of  the  Finance  Com- 
mittee by  the  Secretary  of  the  Treasury  with  a  note  stating 
that  it  included  in  a  condensed  form  all  the  important  legisla- 
tion upon  coinage,  not  obsolete,  since  the  first  mint  was  estab- 
lished in  1792,  that  there  had  been  no  revision  of  the  laws  per- 
taining to  the  mint  and  coinage  since  1837,  and  that  it  was  be- 
lieved that  the  measure,  if  passed,  would  greatly  conduce  to 
the  efficiency  and  economy  of  that  branch  of  the  public  service. 
The  nature  of  the  report  is  indicated  by  the  following: 


FEATURES  OF  THE  MINT  BILL  HI 

"  The  method  adopted  in  the  preparation  of  the  bill  was  first  to 
arrange  in  as  concise  a  form  as  possible  the  laws  now  in  existence 
upon  these  subjects,  witli  such  additional  sections  and  suggestions 
as  seemed  valuable.  Having  accomplished  this,  the  bill,  as  thus 
prepared,  was  printed  upon  paper  with  wide  margin,  and  in  this 
form  transmitted  to  the  different  mints  and  assay  offices,  to  the 
First  Comptroller,  the  Treasurer,  the  Solicitor,  the  First  Auditor, 
and  to  such  other  gentlemen  as  are  known  to  be  intelligent  upon 
metallurgical  and  numismatical  subjects,  with  the  request  that  the 
printed  bill  should  be  returned  with  such  notes  and  suggestions 
as  experience  and  education  should  dictate.  In  this  way  the  views 
of  more  than  thirty  gentlemen  who  are  conversant  with  the  manipu- 
lation of  metals,  the  manufacture  of  coinage,  the  execution  of  the 
present  laws  relative  thereto,  the  method  of  keeping  accounts,  and 
of  making  returns  to  the  Department  have  been  obtained  with  but 
little  expense  to  the  Department  and  little  inconvenience  to  corre- 
spondents. Having  received  these  suggestions,  the  present  bill  has 
been  framed,  and  it  is  believed  to  comprise  within  the  compass  of 
eight  or  ten  pages  of  the  Revised  Statutes  every  important  provision 
contained  in  more  than  sixty  different  enactments  upon  the  mint, 
assay  offices,  and  coinage  of  the  United  States,  which  are  the  re- 
sult of  nearly  eighty  years  of  legislation  upon  these  subjects. 

"The  new  features  of  the  bill  now  submitted  are,  chiefly:  The 
establishment  of  a  Mint  Bureau  of  the  Treasury  Department,  which 
shall  also  have  charge  of  the  collection  of  statistics  relative  to  the 
precious  metals;  the  consolidation  of  the  office  of  Superintendent 
with  that  of  the  Treasurer,  thus  abolishing  the  latter  office,  and  dis- 
connecting the  mint  entirely  from  the  office  of  Assistant  Treasurer: 
the  repeal  of  the  coinage  charge,  and  authorizing  the  exchange  of 
imparted  for  refined  bars;  a  reduction  in  the  amount  of  wastage,  and 
the  tolerance  (deviation  in  weight  and  fineness)  in  the  manufacture 
of  coin;  requiring  the  token  coinage  to  be  of  one  material  of  uni- 
form value,  and  to  be  redeemed  under  proper  regulations  when 
issued  in  excess,  and  the  expense  of  its  manufacture  to  be  paid 
from  specific  appropriations,  and  not  from  the  gain  arising  in  its 
manufacture,  as  heretofore;  an  entire  change  in  the  manner  of  issu- 
ing the  silver  (subsidiary)  coinage;  discontinuing  the  coinage  of  the 
silver  dollar;  limiting  the  amount  of  silver  to  be  used  as  alloy,  so 
as  to  make  the  gold  coinage  of  uniform  color:  the  destruction  of  the 
dies,  not  in  use,  annually:  requiring  vouchers  to  pass  between  the 
different  officers  of  the  mint  in  all  transfers  of  bullion  or  coin:  re- 
quiring increased  bonds  from  officers  of  the  mint,  and  authorizing 
each  officer  to  nominate  his  subordinate  before  appointment;  and 
also  making  it  an  offence  to  increase  or  diminish  the  weights  used 
in  the  mint." 

The  report  called  special  attention  to  the  discontinuance 
of  the  silver  dollar  as  a  standard,  as  may  be  seen  from  the  fol- 
lowing paragraph: 

"SILVER  DOLLAR  —  ITS  DISCONTINUANCE  AS  A  STANDARD. 
"The  coinage  of  the  silver-dollar  piece,  the  history  of  which  is 
here  given,  is  discontinued  in  the  proposed  bill.     It  is  by  law  the 


112  THE  DEMONETIZATION  OF1  SILVER 

dollar  unit,  and,  assuming  the  value  of  gold  to  be  fifteen  and  one- 
half  times  that  of  silver,  being  about  the  mean  ratio  for  the  past  six 
years,  is  worth  in  gold  a  premium  of  above  3  per  cent,  (its  value  being 
103.12)  and  intrinsically  more  than  7  per  cent,  premium  in  our  other- 
silver  coins,  its  value  thus  being  107.42.  The  present  laws  conse- 
quently authorize  both  a  gold-dollar  unit  and  a  silver-dollar  unit, 
differing  from  each  other  in  intrinsic  value.  The  present  gold-dol- 
lar piece  is  made  the  dollar  unit  in  the  proposed  bill,  and  the  silver- 
dollar  piece  is  discontinued.  If,  however,  such  a  coin  is  authorized. 
it  should  be  issued  only  as  a  commercial  dollar,  not  as  a  standard 
unit  of  account,  and  of  the  exact  value  of  the  Mexican  dollar,  which 
is  the  favorite  for  circulation  in  China  and  Japan  and  other  Oriental 
countries." 


of  these  proposed  changes  were  likely  to  excite  any 
serious  controversy  in  1870.  The  gold  standard  was  desired 
by  every  one  who  was  at  all  in  favor  of  specie,  and  without  any 
uneasiness  of  conscience.  The  silver  miners  of  the  Pacific 
slope  had  no  desire  to  have  their  product  coined  at  a  ratio  of  10 
to  1  when  commercially  it  stood  to  gold  as  15-J  to  1.  Few  peo- 
ple in  the  country  could  remember  ever  having  seen  a  silver 
dollar,  and  the  only  question  concerning  it  was  whether  it 
should  be  made  a  part  of  the  subsidiary  coinage,  or  be  coined 
exclusively  for  trade  with  the  East,  or  should  be  dropped  alto- 
gether. Some  thought  that  by  reducing  the  weight  sufficiently, 
thereby  making  it  a  token  coin,  the  silver  bullion  might  be  at- 
tracted to  the  mints  and  silver  coins  made  to  circulate.  The 
Director  of  the  Mint,  Dr.  Linderman,  in  his  report  in  1869, 
urged  the  restoration  of  the  silver  currency  for  change,  in 
lieu  of  the  postal  and  small-note  currency;  as  the  first  step  tow- 
ards and  "  an  important  adjuvant  to  a  general  resumption 
of  specie  payments,"  and  the  plan  was  emphatically  endorsed 
by  the  leading  commercial  papers  of  the  country.  He  per- 
sistently advocated  the  policy,  expressing  the  belief  a  year 
later  that  the  product  of  silver  in  Nevada  and  Colorado  would 
be  sufficient  to  meet  the  demand.  His  plan  was  for  a  much 
more  debased  coinage  than  that  formerly  in  use,  and  he 
defended  it  in  these  words,  furnishing  further  evidence  of  the 
manner  in  which  the  metals  were  popularly  regarded  : 


WAITING  FOR  DEVELOPMENTS  ABROAD  113 

"  This  is  not  a  scheme  for  debasing  the  standard  of  value.  Its 
only  object  is  to  restore  silver  on  such  a  basis,  under  legal 
sanctions,  as  will  enable  it  to  keep  its  subsidiary  place,  whether 
the  chief  currency  be  paper,  as  it  now  is,  or  gold,  as  we  hope 
it  will  soon  be."  It  is  not  strange  that  the  Treasury  and  mint 
officials,  providing  in  their  revision  of  the  mint  laws  for  a  gold 
dollar  as  the  unit  of  value,  were  disinclined  to  favor  a  debased 
silver  dollar,  even  for  subsidiary  purposes,  but  in  view  of  the 
doubts  that  existed  they  inserted  in  the  original  draft  of  the 
bill,  in  brackets,  words  which,  if  retained,  would  provide  for 
a  silver  dollar  equal  in  weight  and  fineness  to  the  French 
5-franc  silver  piece. 

This  bill,  which  was  known  as  Senate  Bill  No.  859,  was,  on 
April  28,  referred  to  the  Finance  Committee,  but  was  not  re- 
ported by  it  at  that  session,  although  it  lasted  till  July  15,  the 
very  day  that  France  decided  on  war.  The  delay  does  not 
seem  to  have  been  occasioned  by  any  disagreement  in  the  com- 
mittee, for  the  members  all  favored  it.  One  of  the  main  rea- 
sons seems  to  have  been  that  it  was  not  desirable  for  Congress 
to  act  on  the  measure  till  it  was  discovered  what  steps  other 
nations,  particularly  France  and  England,  were  likely  to  take 
towards  an  international  coinage.  The  committee  waited  to 
learn  what  modifications  might  be  advisable  in  the  weights  of 
the  coins.  The  United  States  were  at  this  time,  like  other  gov- 
ernments, in  an  attitude  of  expectancy. 

On  February  8,  or  while  the  bill  was  still  in  the  hands  of 
the  revisers,  Senator  Sherman  had  introduced  the  following 
resolution :  "  Resolved,  That  the  President  be  requested,  if 
not  incompatible  with  the  public  interests,  to  invite  a  corre- 
spondence with  Great  Britain  and  other  foreign  powers,  with 
a  view  to  promote  the  adoption  by  the  legislatures  of  the  sev- 
eral powers  of  a  common  unit  and  standard  of  an  international 
gold  coinage,  and  that  such  correspondence  be  submitted  to 
Congress  for  its  information  and  action." 


114  THE  DEMONETIZATION  OP  SILVER 

The  President  acted  accordingly,  and  Secretary  Fish  sent 
out  to  the  various  ministers  communications  upon  the  subject. 
That  sent  to  the  Minister  to  Sweden  will  serve  as  a  convenient 
sample,  and  it  will  introduce  the  fact  that  the  Swedish  Mone- 
tary Commission  already  had  the  formation  of  the  Scandi- 
navian Union  well  under  way,  and  had  declared  for  a  gold 
standard.  The  circular  asked  the  Swedish  government  to  con- 
sider "  whether  it  is  not  practicable  to  arrive  at  an  assimilation 
of  coinage  which  will  secure  many  of  the  advantages  that  can- 
not be  obtained  without  a  uniform  system  of  weights  and 
measures,  and  which  may  lead  hereafter  to  complete  unifica- 
tion," and  "  to  express  its  views  upon  the  subject  of  a  common 
unit  and  standard  of  an  international  gold  coinage  with  a 
view  of  promoting  its  adoption."  Minister  Andrews  delivered 
a  copy  of  the  circular  to  the  Swedish  Commission,  and  mean- 
while Congress  adjourned.  It  is  unnecessary  to  outline  the 
results  of  these  overtures  —  or  rather  lack  of  results  —  for 
after  the  fall  of  Sedan,  September  2,  the  whole  scheme  fell 
to  the  ground,  and  when  the  Forty-first  Congress  met  for  its 
third  session  in  December  the  Finance  Committee  reported  the 
Mint  bill  promptly  (December  19),  unanimously,  and  without 
any  changes  of  importance. 

It  was  discussed  during  the  morning  hours  of  January  9 
and  10,  1871.  The  only  feature  occasioning  much  debate  was 
an  amendment,  emanating  from  the  Finance  Committee,  pro- 
viding for  a  charge  for  coinage.  The  Senate  finally  struck  out 
the  amendment  at  the  earnest  plea  of  the  senators  from  the 
Pacific  States,  and  the  majority  of  the  Finance  Committee 
voted  against  the  whole  bill  on  its  final  passage  rather  than  pass 
it  in  that  form.  But  it  passed  by  a  vote  of  36  to  14,  the  senators 
from  the  Pacific  slope  thinking  they  had  won  a  great  victory. 
They  little  dreamed,  apparently,  that  ten  years  afterwards 
they  would  be  declaiming  against  the  passage  of  the  measure 
as  a  secret  conspiracy,  and  against  the  act  itself  as  a  crime. 


THE  SILVER  DOLLAR  DROPPED  115 

As  it  was  reported  by  the  Finance  Committee  and  as  it 
passed  the  Senate,  the  bill  contained  this  provision: 

"  Sec.  15.  And  be  it  further  enacted,  That  of  the  silver  coins  the 
weight  of  the  half-dollar,  or  piece  of  50  cents,  shall  be  192  grains; 
and  that  of  the  quarter-dollar  and  dime  shall  be,  respectively,  one- 
half  and  one-fifth  of  the  weight  of  said  half-dollars;  that  the  silver 
coin  issued  in  conformity  with  the  above  section  shall  be  legal 
tender  in  any  one  payment  of  debts  for  all  sums  less  than  $1." 

The  following  section  was  in  the  bill  at  the  start,  was  never 
molested  in  whatever  shape  the  measure  took,  and  was  in  the 
law  as  finally  enacted : 

"Sec.  18.  And  be  it  further  enacted,  That  no  coins,  either  of  gold, 
silver,  or  minor  coinage,  shall  hereafter  be  issued  from  the  mint 
other  than  those  of  the  denominations,  standards,  and  weights 
herein  set  forth." 

The  effect  of  this  was,  of  course,  to  drop  the  silver  dollar. 
The  next  day  the  bill  was  referred  by  the  House  to  the  Com- 
mittee on  Coinage,  Weights,  and  Measures,  and  printed  in  full ; 
February  25,  it  was  reported  by  Kelley,  of  that  committee, 
with  a  few  amendments,  the  last  sentence  of  Section  15,  quoted 
above,  being  changed  so  as  to  read,  "  which  coins  shall  be 
a  legal  tender,  at  their  denominational  value,  for  any  amount 
not  exceeding  $5  in  any  one  payment."  A  week  later  the 
Forty -first  Congress  adjourned;  the  Forty-second  met  at  once 
in  special  session,  and  five  days  later  Kelley  reintroduced  the 
measure,  as  his  committee  had  reported  it  in  the  preceding 
Congress  two  weeks  before,  and  it  became  known  as  House 
Bill  No.  5.  But  an  adjournment  was  taken  without  action  a 
month  later,  and  Congress  was  not  to  meet  again  till  Decem- 
ber. 

Meanwhile  there  were  important  monetary  events  in 
Europe.  During  the  month  of  November,  1870,  the  President 
of  the  North  German  Union  entered  into  treaties  with  the 
Grand  Dukes  of  Hesse  and  Baden,  and  with  the  Kings  of  Wiir- 
temberg  and  Bavaria,  concerning  the  articles  of  union  of  these 
states  and  the  pledge  to  establish  the  German  empire  on  the 


116  THE  DEMONETIZATION  OF  SILVER 

1st  of  January,  1871.  On  the  18th  of  January,  in  the  famous 
Hall  of  Mirrors  of  the  palace  of  Versailles,  King  William  of 
Prussia  was  crowned  Emperor,  and  on  the  21st  of  March 
the  first  German  assembly  elected  by  the  direct  vote  of  the 
people  met  at  Berlin.  Nothing  remained  now  but  to  organize 
the  empire,  and  one  of  the  first  things  done  was  to  institute  the 
monetary  reform  that  had  so  long  been  awaiting  the  comple- 
tion of  the  political  programme.  While  the  Congress  of  the 
United  States  was  waiting  to  meet,  the  German  Parliament 
passed  the  act  by  which  the  new  empire  assumed  the  right  of 
coinage  in  its  own  name,  ordained  a  coinage  of  gold  coins, 
decimal  multiples  of  unit  called  the  "  mark,"  the  gold  mark 
being  rated  as  one-third  of  a  Prussian  thaler,  and  the  relation 
between  the  gold  and  silver  mark  being  15£  to  1.  The  act  also 
provided  that  the  coinage  of  the  larger  silver  coins  should 
cease. 

This  was  simply  an  act  providing  for  a  transition  state 
looking  to  the  ultimate  adoption  of  the  gold  standard,  and  so 
far  was  entirely  compatible  with  a  purpose  to  follow  the  course 
laid  down  by  the  conference  of  18C7  for  countries  then  on  a 
silver  standard.  Very  little  is  known  about  some  of  the  coins 
that  were  circulating  in  parts  of  Germany  at  the  time  this  act 
was  passed,  but  the  entire  stock  consisted  probably  of  some- 
thing like  three  parts  of  silver  to  one  of  gold.  The  silver  coins 
continued  to  be  legal  tender,  so  that  Germany  was  practically 
on  a  double  standard,  but  coining  only  gold;  to  this  day  there 
remain  some  400,000,000  old  thaler  pieces  in  circulation  at 
full  legal  tender,  besides  about  70,000,000  Austrian  thalers 
or  vereinsthalers  coined  under  the  old  treaty  of  1857,  and  left 
in  Germany  when  Austria  withdrew  in  1867. 

But  this  transition  step  was  not  well  calculated  to  promote 
an  international  coinage.  Bismarck  probably  had  no  disposi- 
tion at  this  time  to  "  Frenchify  "  the  coinage  of  the  new  em- 
pire, even  had  it  been  convenient  to  do  so.  Shrewder  than  most 


GERMANY  PROVIDES  FOR  GOLD  COINAGE  117 

men  of  his  time,  and  having,  earlier  in  his  career,  as  Prussian 
Minister  to  Paris,  taken  his  own  measurement  of  the  French 
Emperor,  he  regarded  the  plan  for  international  coinage  as  a 
Napoleonic  dream.  But,  further  than  this,  he  found  a  large 
part  of  the  German  people  wedded  by  tradition  and  habit  to 
the  old  thalers,  and  it  is  doubtful  if  he  would  have  advised  the 
Federal  Council,  which  by  the  law  retained  considerable  juris- 
diction over  coinage,  to  have  complicated  the  situation  of  the 
new  empire  by  an  unfamiliar  coinage,  even  had  it  been  other 
than  French. 

The  mark,  though  a  new  unit,  was  not  a  new  term  for  coins. 
It  was  found  among  the  German  people  as  early  as  the  end  of 
the  tenth  century.  The  mark  of  Cologne  was  the  standard 
of  payment  for  centuries  for  the  traders  of  the  Rhenish  states. 
The  proposition  for  a  unification  of  the  German  currency  by 
reckoning  all  transactions  by  marks,  the  mark  being  a  third  of 
a  thaler,  was  extensively  advocated  before  1860;  but  after  that 
time  was  abandoned  by  the  German  writers.  The  makers  of 
the  empire,  however,  considered  it,  if  less  scientific,  the  most 
practicable  as  a  system  for  Germany.  It  indicates  that  when 
a  nation  makes  a  coinage  system  for  itself  it  pays  very  little 
attention  to  the  systems  of  other  nations,  but  rather  gives  to 
it  a  national  characteristic.1 

On  the  same  day  that  the  German  empire  enacted  its  first 
coinage  measure,  the  Forty-second  Congress  convened  at 
"Washington  for  its  second  session,  and  another  chapter  in  the 

i  The  almost  irreconcilable  difference  between  the  new  German 
system  and  that  of  the  other  great  commercial  nations  may  be  ob- 
served from  the  following  table: 

Monetary  Weight,       Fine- 

Country,  unit.  grains.        ness.  Value. 

Germany,  Mark,  $0.2382 

France,  Franc,  4.978     .900           0.1929 

(^reat  Britain,  Pound,  123.270     .916|         4.8065 

France,  25  francs,  4.823 

Germany,  20  marks.  4.7CA 

United  States,  Half-eagle,  6.14G     .900            5.00 


118  THE  DEMONETIZATION  OF  SILVER 

career  of  the  Mint  bill  was  begun.  It  was  reported  favorably 
on  January  9,  1872,  by  Kelley,  who  said  that  the  committee 
had  been  over  the  bill  "  line  by  line,  and  word  by  word."  He 
considered  the  most  important  change  that  of  creating  a  Di- 
rector of  the  Mint  with  headquarters  in  the  Treasury  Depart- 
ment. In  the  course  of  the  discussion  he  said  that  he  would 
have  preferred  a  wider  difference  between  the  gold  and  silver 
coinage,  and  he  also  "  would  have  liked  to  have  made  the  gold 
dollar  uniform  with  the  French  system  of  weights,  taking  the 
gramme  as  a  unit,"  from  which  it  appears  that  there  were  still 
some  hopes  of  international  coinage  after  the  fall  of  Napoleon. 
But  generally  the  discussion  was  confined  simply  to  some  feat- 
ures of  the  mint  regulations,  and  on  the  next  day  it  was  recom- 
mitted to  the  Coinage  Committee. 

At  this  time,  in  the  temporary  absence  of  Kelley,  the  bill 
was  taken  in  charge  by  Samuel  Hooper,  of  Massachusetts.  A 
London  friend  of  his,  Latham  by  name,  who  was  acquainted 
with  Ernest  Seyd,  the  strongest  advocate  of  bimetallism  in 
England  at  that  time,  had  sent  to  Hooper,  early  in  1872,  one  of 
Seyd's  books  —  "  Suggestions  on  American  Coinage  "  -  in 
which  disastrous  consequences  of  silver  demonetization  were 
predicted,  and  the  fact  that  the  United  States  seemed  to  be 
on  the  point  of  lending  a  hand  to  that  movement  deplored. 
Hooper  evidently  read  the  book  with  care,  for  he  sent  to  his 
friend  Latham  a  copy  of  the  bill  then  before  the  committee, 
and  expressed  a  desire  that  Seyd  should  examine  it  and  write 
to  him  any  suggestions  he  might  desire  to  make.  "  As  to  the 
theory  of  the  double  valuation,"  he  wrote  to  Latham,  "  I  do  not 
understand  it." 

"Without  awaiting  a  reply  —  for  he  had  been  seeking  in- 
formation from  various  sources  —  he  reintroduced  the  meas- 
ure on  February  9th  as  House  Bill  No.  1427;  it  was  printed, 
recommitted,  reported  back  four  days  later  with  some  amend- 
ments, and  again  printed.  In  this  measure,  for  the  first  time 


SEYD'S  PLEA  FOE  A  SILVER  DOLLAR  119 

since  the  subject  had  been  brought  to  the  attention  of  Congress 
two  years  before,  a  provision  for  a  silver  dollar  appeared.  The 
section  quoted  above  from  the  previous  bills  appeared  in 
Hooper's  measure  as  follows: 

"  That  the  silver  coins  of  the  United  States  shall  be  a  dollar,  a 
half-dollar  or  fifty-cent  piece,  a  quarter-dollar  or  tweuty-tive-cent 
piece,  and  a  dime  or  ten-cent  piece;  and  the  weight  of  the  dollar 
shall  be  384'  grains;  the  half-dollar,  quarter-dollar,  and  the  dime 
shall  be,  respectively,  one-half,  one-quarter,  and  one  tenth  of  the 
weight  of  said  dollar;  which  coins  shall  be  a  legal  tender,  at  their  de- 
nominational value,  for  any  amount  not  exceeding  $5  in  any  one 
payment." 

These  changes  regarding  silver  coinage  could  not  have 
been  easily  misunderstood,  even  if  they  were  largely  ignored. 
The  committee  were  not  unaware  of  the  warnings  of  the  bi- 
metallists,  whatever  may  be  said  of  the  other  members  of  Con- 
gress. A  few  days  after  Hooper  introduced  the  amended  bill 
he  must  have  received  Seyd's  reply,  which  was  written  on  Feb. 
17.  It  was  a  long  criticism  of  the  bill,  section  by  section, 
but  his  chief  criticism  was  directed  against  the  section  regard- 
ing silver  coins.  He  strongly  argued  against  the  discontinu- 
ance of  the  silver  dollar  (the  bill  Hooper  had  sent  to  him  was 
the  previous  draft  reported  by  Kelley,  and,  like  the  bill  as 
originally  introduced,  made  no  provision  for  a  silver  dollar), 
and,  after  citing  many  reasons  for  his  views,  suggested  that  pro- 
vision be  made  for  a  dollar  of  400  grains,  to  be  legal  tender  up 
to  $100,  and  for  which  the  mint  charge  should  be  1  per  cent. 
He  thought  that  Congress  could  not  be  sufficiently  aware  of 
the  controversy  that  had  been  going  on  in  Europe  on  the  sub- 
ject, and  said: 

"At  all  events.  I  hope  you  will  fully  investigate  this  subject  before 
you  commit  America  to  this  course  of  the  one-sided  gold  valuation. 
Men  like  yourself,  on  framing  a  coinage  bill,  undertake  a  gigantic 
responsibility,  which  strongly  affects,  not  only  a  whole  nation's  wel- 
fare and  happiness,  but  also  that  of  the  world  at  large.  Pray,  do 
not  despise  this  language.  The  deep  study  of  all  the  principles  and 
interests  connected  with  the  organization  of  social  life  warrants  it. 


Equivalent  to  the  5-franc  piece. 


120  THE  DEMONETIZATION  OF  SILVER 

Obscure  as  this  subject  is  to  many  people,  they  succeed  in  estab- 
lishing their  work,  and  when  it  once  stands  it  is  like  a  fate  decreed, 
to  which  all  must  bow  because  they  do  not  see  its  evils  clearly,  and 
it  is  difficult  to  amend  it.  Nay,  as  an  existing  thing  it  is  defended 
and  elevated  into  a  principle." 

But  Seyd's  arguments  evidently  failed  to  convince  those 
in  Congress  who  may  have  been  informed  of  them  ;  to  use 
Hooper's  words,  "  as  to  the  double  valuation,"  they  could  not 
understand  it.  It  was  next  to  impossible  for  any  one  in  the 
United  States  then  to  regard  silver  as  other  than  subsidiary. 
When  the  bill  came  up  for  discussion,  April  9,  Hooper,  in  a 
speech  occupying  ten  columns  in  the  Congressional  Globe,  ex- 
plained that  the  committee  had  provided  a  silver  dollar,  but 
"  making  it  a  subsidiary  coin  in  harmony  with  the  silver  coins 
of  less  denomination,  to  secure  its  concurrent  circulation  with 
them."  Stoughton,  of  Michigan,  another  member  of  the  com- 
mittee, in  a  further  explanation,  made  this  perfectly  plain 
statement:  "  The  office  of  silver  or  subsidiary  coins  is  simply 
to  supply  the  public  want  for  small  change.  They  are  made 
the  tokens  of  value,  not  the  value  itself,  and  are  designed  only 
for  exchange  and  circulation  at  home  up  to,  but  never  in  ex- 
cess of,  the  requirements  of  trade."  If  there  were  many 
people  in  the  United  States  at  that  time  who  held  a  different 
view,  there  were  very  few  in  Congress.  Some  opposed  reduc- 
ing the  silver  in  the  dollar  because  the  dollar  was  a  unit  of 
value,  and  one  or  two  congressmen  were  inclined  to  think  that 
small  coins  should  be  of  full  value.  We  may  quote,  as  a 
sample  reply  to  these,  the  remark  of  Kelley,  who,  four  years 
later,  became  a  free-silver  advocate,  and  told  his  constituents 
that  the  demonetization  of  the  silver  dollar  in  1873  was  a 
mystery  which  nobody  could  explain.  He  said : 

"  I  wish  to  ask  the  gentleman  who  has  .lust  spoken  (Mr.  Potter) 
if  he  knows  of  any  government  in  the  world  which  makes  its  sub- 
sidiary coinage  of  full  value?  The  silver  coin  of  England  is  10 
per  cent,  below  the  value  of  gold  coin.  and.  acting  under  the  advice 
of  the  experts  of  this  country  and  of  England  and  France.  Japan 
has  made  her  silver  coinage  within  the  last  year  12  per  cent, 
below  the  value  of  gold  coin,  and  for  this  reason:  It  is  impossible 


CONGRESS  SCORNS  THE  DOUBLE  STANDARD  121 

to  retain  the  double  standard.  The  values  of  gold  and  silver  con- 
tinually fluctuate.  You  cannot  determine  this  year  what  will  be  the 
relative  values  of  gold  and  silver  next  year.  They  were  15  to  1 
a  short  time  ago;  they  are  16  to  1  now. 

"  Hence,  all  experience  has  shown  that  you  must  have  one 
standard  coin  which  shall  be  a  legal  tender  for  all  others,  and  then 
you  may  promote  your  domestic  convenience  by  having  a  subsid- 
iary coinage  of  silver,  which  shall  circulate  in  all  parts  of  your 
country  as  legal  tender  for  a  limited  amount  and  be  redeemable  at 
its  face  value  by  your  government.  But,  sir,  I  again  call  the  at- 
tention of  the  House  to  the  fact  that  the  gentlemen  who  oppose  this 
bill  insist  upon  maintaining  a  silver  dollar  worth  3%  cents  more 
than  the  gold  dollar  and  worth  7  cents  more  than  two  half-dollars, 
and  that  so  long  as  those  provisions  remain  you  cannot  keep  silver 
coin  in  the  country." 

On  May  27  Hooper  again  called  up  the  bill  and  offered 
a  substitute,  known  as  House  Bill  No.  2934,  but  it  contained 
exactly  the  same  provision  regarding  silver  coinage  as  the  bill 
displaced.  After  a  discussion,  mainly  upon  the  minor  coinage, 
the  bill  passed  —  yeas,  110;  nays,  13.  Two  days  later  it  was 
referred  to  the  Finance  Committee  in  the  Senate,  and  while  in 
its  hands  that  session  adjourned. 

In  his  report  to  Congress,  which  reconvened  on  December 
2. 1872,  the  Secretary  of  the  Treasury  again  urged  the  passage 
of  the  measure,  as  in  his  two  previous  reports,  but,  in  view  of 
the  changed  value  of  silver,  he  recommended  alterations  in  the 
bill  prohibiting  the  coinage  of  silver  dollars  for  circulation 
in  this  country,  but  that  authority  be  given  for  the  coinage  of 
a.  silver  dollar  to  be  furnished  at  its  actual  cost  for  trade  with 
the  East.  He  called  attention  to  the  discontinuance  by  Ger- 
many and  other  nations  of  the  use  of  silver  as  currency,  and 
said  that  the  depreciation  of  silver  was  likely  to  continue. 

The  Finance  Committee,  whether  adopting  these  sugges- 
tions or  reaching  a  similar  conclusion  in  their  own  way  matters 
not,  reported  the  bill  on  December  16,  with  the  following 
amendment  of  the  section  concerning  silver  coins : 

"  That  the  silver  coius  of  the  United  States  shall  be  a  trade  dollar, 
a  half-dollar  or  fifty-cent  piece,  a  quarter-dollar  or  twenty-five-cent 
piece,  a  dime  or  ten-cent  piece:  and  the  weight  of  the  trade  dollar 
shall  be  420  grains  troy:  the  weight  of  the  half-dollar  shall  be  twelve 
grammes  and  one-half  a  gramme:  the  qnarter-dollar  and  the  dime 


122  THE  DEMONETIZATION  OF  SILVER 

shall  be,  respectively,  one-half  and  one-fifth  of  the  weight  of  said 
half-dollar;  and  said  coins  shall  be  a  legal  tender  at  their  nominal 
value  for  any  amount  not  exceeding  $5  in  any  one  payment." 

After  some  further  amendments,  reported  by  the  Finance 
Committee,  the  bill  was  taken  up  on  January  17,  1873,  and 
passed  after  considerable  discussion  upon  several  features,  but 
little  regarding  the  new  provision  for  silver  coinage.  It  was 
fully  explained,  however,  by  Senator  Sherman,  who,  in  the 
course  of  the  debate,  said : 

"  This  bill  proposes  a  silver  coinage  exactly  the  same  as  the 
French  and  what  are  called  the  associated  nations  of  Europe,  who 
have  adopted  the  international  standard  of  silver  coinage;  that  is,  the 
dollar  (two  half-dollars)  provided  for  by  this  bill  is  the  precise 
equivalent  of  a  five-franc  piece.  It  contains  the  same  number  of 
grammes  of  silver,  and  we  have  adopted  the  international  gramme 
instead  of  the  grain  for  the  standard  of  our  silver  coinage.  The 
trade-dollar  has  been  adopted  mainly  for  the  benefit  of  the  people  of 
California  and  others  engaged  in  trade  with  China. 

"  That  is  the  only  coin  measured  by  the  grain  instead  of  by  the 
gramme.  The  intrinsic  value  of  each  is  to  be  stamped  upon  the  coin. 
The  Chamber  of  Commerce  of  New  York  recommended  this  change, 
and  it  has  been  adopted,  I  believe,  by  all  the  learned  societies  that 
have  given  attention  to  coinage,  and  has  been  recommended  to  us, 
I  believe,  as  the  general  desire." 

This  precisely  states  the  case  in  a  few  words,  and  it  is  un- 
necessary to  enter  into  a  further  statement  of  the  historical 
development  of  this  modification  of  the  purposes  before  pre- 
vailing. From  the  first  to  the  last  the  discontinuance  of  the 
silver  dollar  as  a  standard  of  value  or  a  unit  of  coinage  had 
been  a  feature  of  the  reform,  and  was  so  generally  accepted 
that  it  occasioned  only  the  most  incidental  discussion.  Dur- 
ing the  debate  in  the  Senate  little  was  said  concerning  silver 
coins,  except  as  related  to  dispensing  with  the  emblem  of  the 
eagle  and  stamping  the  weight  and  fineness  on  the  coins.  To 
some,  that  seemed  a  needless  disregard  of  the  national  emblem, 
and  the  eagle  was  retained  by  a  majority  of  two  votes. 

The  bill  went  to  the  House,  which  non-cor.curred  in  the 
Senate  amendments;  the  Senate  insisted  upon  its  action,  Janu- 
ary 27,  and  it  went  to  a  conference  committee,  where  the 
House  conferees  receded  from  most  of  its  disagreements,  and 


PASSAGE  OF  THE  MINT  BILL  123 

the  bill  became  a  law  on  February  12,  1873.  Thus,  five  years 
after  Senator  Sherman  introduced  a  bill  demonetizing  the  sil- 
ver dollar  as  a  collateral  standard  of  value,  and  three  years 
after  the  first  bill  for  the  revision  of  the  mint  laws  was  intro- 
duced, the  change  was  accomplished.  In  none  of  these  meas- 
ures did  any  provision  for  a  silver  dollar  of  the  old  standard  ap- 
pear, and  at  no  stage  was  such  a  provision  strongly  suggested. 
No  one  desired  to  actually  make  silver  a  collateral  standard  of 
value  with  gold.  Silver  was  not  in  circulation,  and  the  purpose 
of  the  revisers  of  the  mint  laws  was  to  once  more  bring  it  into 
circulation  by  making  it  a  subsidiary  coinage.  The  bill  was 
printed  thirteen  times  by  order  of  two  different  Con- 
gresses, was  discussed  during  five  different  sessions,  and 
the  debates  on  the  measure  occupy  148  pages  in  the  Congres- 
sional Globe.  The  fact  that  the  standard  silver  dollar  was  to 
be  discontinued  was  repeatedly  brought  to  the  attention  of 
every  member  of  Congress  in  the  debates  and  in  the  depart- 
ment reports,  and  the  purpose  to  make  silver  coins  entirely  sub- 
sidiary was  constantly  pushed  forward  by  the  promoters  of  the 
bill  as  one  of  the  features  commending  it  to  favorable  action. 

The  course  of  this  measure  through  Congress  is  thus  given 
with  considerable  detail,  not  simply  because  it  was  the  natural 
outcome  of  the  previous  agitation  for  the  internationalization 
of  coinage  under  the  conditions  prevailing  from  1867  to  1873 
in  this  country,  but  because  it  opens  up  what  must  be  con- 
sidered one  of  the  most  remarkable  chapters  in  monetary 
history  in  this  country  and  in  the  world.  The  motives  for 
the  passage  of  this  measure  have  been  so  persistently  misrepre- 
sented during  the  quarter  of  a  century  that  has  elapsed  since 
its  enactment,  even  by  those  who  took  a  prominent  part  in  its 
long  Congressional  career,  that  a  fuller  statement  of  its  history 
than  it  really  deserves,  in  connection  with  efforts  at  interna- 
tional action,  seems  desirable. 

Before  the  final  passage  of  the  measure  several  European 


124  THE  DEMONETIZATION  OP  SILVER 

governments  had  definitely  arranged  for  the  adoption  of  the 
gold  standard  and  others  were  preparing  to  take  defensive 
action.  As  a  result  of  the  work  of  the  Swedish  Commission, 
a  monetary  treaty  was  concluded,  December  18,  1872,  between 
Sweden  and  Denmark  for  placing  the  currency  of  the  two 
countries  on  a  gold  basis,  the  monetary  unit  being  the  krone, 
weighing  6.914  grains;  being  nine-tenths  fine,  it  was  thus 
worth  about  three  cents  more  than  the  German  mark  and 
seven  and  one-half  cents  more  than  the  franc.  Silver,  by  its 
provisions,  was  coined  only  on  government  account  with 
limited  legal  tender,  but  all  coins  of  either  state  were  legal  ten- 
der in  the  other,  according  to  the  terms  of  the  agreement.  Nor- 
way formally  entered  the  union  in  June,  1873. 

The  Bank  of  the  Netherlands,  which  for  twenty  years  had 
bought,  at  the  fixed  price  of  104.65  florins  per  kilogramme,  all 
the  silver  ingots  offered  it,  ceased  the  practice  in  1872,  and 
in  October  of  that  year  a  commission  was  appointed  to  con- 
sider the  change  taking  place  in  the  neighboring  states  by  the 
substitution  of  gold  for  silver  as  currency,  and  to  suggest  such 
remedies  as  might  seem  expedient  to  counteract  any  influence 
prejudicial  to  the  Netherlands  arising  therefrom.  The  com- 
mission reported  in  January,  1873,  proposing  the  provisional 
suspension  of  silver  coinage,  and  this  was  done  by  law  in  May. 
It  also  advised  that,  so  long  as  there  was  a  hope  that  Germany 
would  keep  the  double  standard,  the  Netherlands  should  coin 
a  gold  piece,  and  it  recommended  substantially  the  system  in 
use  previous  to  1847,  when  Holland  demonetized  gold,  that  is, 
one  standard  of  silver  and  one  of  gold  at  the  ratio  of  15|  to  1. 
But  in  October,  when  the  policy  of  Germany  had  become  more 
apparent,  the  commission  made  a  second  report,  in  which  it 
strongly  urged  the  adoption  of  the  exclusive  gold  standard. 

On  the  basis  of  this  report,  the  government,  through  the 
Minister  of  Finance,  submitted  to  the  second  chamber  a  bill 
making  gold  alone  the  standard  and  the  gulden  or  florin  the 


MOVEMENT  FOR  THE  GOLD  STANDARD  IN  HOLLAND  125 

unit  of  account,  .605 61  grammes  fine,  valued  as  against  silver 
at  the  ratio  of  1  to  15.604.  In  supporting  the  measure  he 
urged  that  silver  was  likely  to  depreciate  in  consequence  of 
the  amount  being  offered  in  the  market.  Germany  was  selling 
silver  largely,  and  Belgium  was  preparing  to  do  so  with  the  evi- 
dent desire  to  continue  its  use  as  a  standard  of  currency,  while 
the  Netherlands,  already  financially  isolated,  by  adhering  to 
their  existing  system  would,  in  his  opinion,  experience  a  grow- 
ing inconvenience  from  which  relief  would  become  more  and 
more  difficult.  But  strong  objection  was  made  that  the  bill  did 
not  apply  to  the  colonies;  that  the  old  standard  for  them,  and 
a  new  one  and  different  one  for  the  mother  country  was  equally 
unnecessary  and  unwise,  and  it  was  urged  that  action  should  be 
deferred  until  an  expression  from  the  colonies  could  be  ob- 
tained. Moreover,  the  widest  difference  of  opinion  prevailed  as 
to  the  fineness  of  the  contemplated  issue.  That  proposed  by 
the  government  corresponded  neither  with  the  German  stand- 
ard nor  with  that  of  the  Latin  Union,  being  above  the  one 
and  below  the  other.  Some  of  the  members  gave  weighty 
reasons  for  joining  the  former,  and  others  were  equally  strenu- 
ous for  conforming  to  the  latter,  and  not  a  few  clung  to  the 
standard  urged  in  the  bill,  mainly,  it  would  seem,  because  it 
came  nearest  to  that  used  by  their  fathers  before  1847.  The 
principle  of  the  "  dollar  of  the  daddies,"  which  has  exerted  so 
much  influence  in  our  currency  legislation,  was  instrumental 
in  determining  the  character  of  the  German  currency  reform, 
and  was  not  wanting  in  Holland. 

Having  repeatedly  discussed  the  project,  finally  for  a  num- 
ber of  days  in  succession,  the  Dutch  chamber  at  last  resolved 
to  divide  the  bill  so  that  the  sense  of  the  body  might  be  taken 
on  the  proposition  to  introduce  the  gold  standard  and  on  the 
rate  of  alloy  separately,  and  that  the  latter  proposition  should 
be  put  first.  Accordingly,  after  several  amendments  had  been 
offered  and  rejected,  the  question  of  the  alloy,  as  in  the  bill, 


126  THE  DEMONETIZATION  OF  SILVER 

was  put  to  test,  29  voting  for  it  and  40  against  it.  On  learning 
the  result,  the  Minister  of  Finance  immediately  withdrew  the 
bill.1 

The  progress  of  the  German  monetary  policy  was  watched 
closely  and  somewhat  anxiously  by  the  other  European  states. 
Up  to  the  end  of  1872  the  German  gold  coinage  amounted  to 
twenty-one  millions  sterling.  That  the  prospect  was  not  a 
comfortable  one  even  at  this  date  may  be  judged  from  the 
financial  reviews  in  th  London  press  at  the  time.  "  As  the 
annual  money  supply  of  gold  throughout  the  world  is  reckoned 
at  little  more  than  £20,000,000,"  said  the  London  News,  "  and 
the  usual  demand  for  miscellaneous  purposes  is  very  large,  it 
follows  that,  if  the  German  government  perseveres  in  its 
policy,  the  strain  upon  existing  stocks  and  currencies  will  be 
most  severe.  Unless  the  annual  production  of  gold  should 
suddenly  increase,  the  money  markets  of  the  world  are  likely 
to  be  perturbed  by  this  bullion  scarcity."  But  Germany  per- 
severed. In  1872  a  bill  was  framed  for  establishing  the  im- 
perial gold  standard  in  the  place  of  the  local  standards  still 
maintained  in  the  different  states,  and  it  finally  became  a  law, 
July  9,  1873.  It  provided  for  an  imperial  silver  coinage  on 
government  account,  the  maximum  amount  of  which  was  fixed 
at  10  marks  per  head  of  the  population,  and  the  legal  tender 
of  which  was  limited  to  20  marks  between  individuals,  while 
it  was  payable  to  the  government  in  any  sum.  The  Federal 
Council  was  directed  to  designate  public  treasuries  where  re- 
demption of  silver  coins  should  be  made  in  gold,  when  pre- 
sented in  sums  of  not  less  than  200  marks.  Questions  of 
weight  and  other  details  concerning  the  coinage  were  remitted 
to  the  jurisdiction  of  the  Federal  Council,  which  also  was  given 
the  power  of  putting  out  of  currency  any  coins  circulating  in 
Germany,  and  the  retirement  from  circulation  of  the  existing 
silver  coin  was  left  to  administrative  control.  Bismarck  did 

j  Minister  Charles  T.  Gorham  to  Secretary  Fish,  March  12,  1874. 


THE  GERMAN  ACT  OF  1873  127 

not  propose  to  have  the  currency  question  too  extensively  left 
to  the  tender  mercies  of  a  representative  body  which  might  an- 
tagonize his  public  policy,  and,  as  he  soon  found,  was  often 
disposed  to  do  so. 

The  peculiar  feature  of  this  monetary  change  was  that  the 
old  silver  coins  remained  unlimited  legal  tender,  while  the 
new  imperial  silver  was  legal  tender  only  to  the  amount  of  20 
marks  between  individuals.  For  all  new  silver  coins  issued 
it  was  provided  that  an  equal  amount  of  old  silver  coin  should 
be  withdrawn;  but  for  the  time  the  German  currency  of  un- 
limited tender  consisted  of  silver  much  more  than  of  gold. 
Up  to  the  preliminary  law  of  1871  there  had  been  coined  of 
silver,  in  all,  1280  millions  of  marks,  including  93  millions 
of  marks  in  Austrian  thalers  (vereinsthalers),  which  stood  on 
the  same  footing  under  the  law,  in  respect  to  all  payments, 
with  the  thalers  of  German  coinage.  Another  feature  of  the 
law  was  the  provision  for  the  withdrawal  of  all  bank-notes  not 
made  payable  in  imperial  currency,  and  for  the  issue  of  none 
of  a  lower  denomination  than  100  marks,  or  about  five  pounds 
sterling,  or  $23.82.  Previously,  they  had  been  issued  as  low 
as  one  thaler,  and  this  restriction  was  calculated  to  maintain 
and  increase  the  use  of  silver  coins  in  small  transactions,  thus 
making  it  possible  for  the  administrative  authorities  to  throw 
on  the  market  the  least  amount  of  silver  consistent  with  the  ac- 
complishment of  the  reform.  The  future  effect,  therefore, 
of  the  change  depended  upon  two  things  —  the  amount  of 
gold  absorbed  for  the  new  currency  and  the  amount  of  silver 
melted  into  bars  from  old  coins  called  in  and  thrown  on  the 
market.  The  former,  of  course,  was  calculated  to  make  gold 
scarcer  and  dearer,  and  the  latter  to  make  silver  more  plentiful 
and  cheaper.  If  other  nations  had  continued  to  coin  silver 
freely,  as  they  had  done  up  to  this  time,  it  is  probable  that 
the  silver  Germany  found  it  could  dispense  with  would  not 
have  depressed  its  commercial  value  seriously  below  the  ratio 


128  THE  DEMONETIZATION  OF  SILVER 

of  15|  to  1,  for  with  no  bank-notes  below  100  marks  the  em- 
pire required  a  large  amount  of  silver.  But  other  nations 
were  bent  on  a  similar  reform,  and  still  others,  alarmed  at  the 
prospect,  hastened  to  restrict,  and,  finally,  to  stop  silver  coin- 
age, at  a  time  when  its  production  was  on  the  increase,  and 
when,  because  of  the  enlarged  sale  of  council  bills,  India  was 
absorbing  much  less.  In  this  situation  the  "  silver  question  " 
was  born. 


CHAPTER  IV 

CONTINUED  LIMITATION  OF  SILVER  COINAGE  — AWAKENING  IN  THE  UNITED 

STATES 

FROM  1873,  which  was  characterized  by  the  conspicuous 
instances  of  the  adoption  of  the  gold  standard  just  indicated, 
to  1878,  when  the  first  important  effort  was  made  to  secure 
international  bimetallism,  is  a  period  requiring  close  examina- 
tion of  conditions  both  here  and  abroad  for  a  proper  under- 
standing of  the  reasons  for  the  advancement  of  the  bimetallic 
sentiment,  and  for  the  avoidance  of  those  misapprehensions 
quite  sure  to  arise  from  a  study  of  monetary  events  in  any  one 
country  alone.  It  will  be  profitable  to  begin  by  fixing  in  the 
mind  a  few  dry  facts,  which,  whether  in  the  nature  of  causes 
or  results,  will  shed  some  light  on  the  remarkable  changes  in 
economic  conditions,  and  in  public  opinion. 

The  annual  average  production  of  gold  and  silver  in  the 
world  in  periods  of  five  years,  from  1861  to  1880  inclusive,  as 
compiled  from  Dr.  Soetbeer's  table  of  averages,  was  as  follows: 


GOLD. 

SILVER. 

Years. 

Fine  Ounces. 

Value. 

Fine  Ounces. 

Coining  Value. 

1861-65 

5,945,582 

$122,989,000 

35,401,972 

§45,772,000 

1866-70 

6,270,086 

129,614,000 

43,051,583 

55.663,000 

1871-75 

5,591,014 

115,577,000 

63,317,014 

81,864,000 

1876-80 

5,543,110 

114,586,000 

78,775,602 

101,851,000 

Total  Pro- 

duction. 

1861-70 

61,098,340 

81,263,015,000 

392,267,776 

8-507,174,000 

1871-80 

55,670,618 

1,150,815,000 

710,463,078 

918,578,000 

8112,200,000 


$411,404,000 


Difference, 
t 
The  value  of  the  world's  product  of  gold,  therefore,  was 

$112,200,000  less  in  the  latter  decade  than  in  the  former,  and 

of  the  product  of  silver  $-111,404,000  greater. 
9 


130 


AWAKENING  IN  THE  UNITED  STATES 


From  the  reports  of  the  Director  of  the  Mint  is  derived  the 
following  statement  of  the  coinage  of  gold  and  silver  in  the 
world,  1873-80,  and  the  gold  coinage  of  the  United  States  and 
Germany  for  the  same  period : 


WORLD. 

GERMANY. 

UNITED  STATES. 

Year. 

Gold. 

Silver. 

Gold. 

Gold. 

1873 

$257,630,000 

$131,544,000 

$140,490,000 

$57,022,000 

1874 

135,778,000 

102,931,000 

22,264,000 

35,254,000 

1875 

205,340,000 

123,143,000 

39,608,000 

33,553,000 

1876 

213,119,000 

126,577,000 

37,943,000 

38,178,000 

1877 

173,675,000 

78,402,000 

26,784,000 

44,078,000 

1878 

188,386,000 

161,191,000 

29,742,000 

49,786,000 

1879 

90,752,000 

104,888,000 

11,043,000 

39,080,000 

1880 

149,725,000 

84,611,000 

6,662,000 

62,308,000 

Total,     $1,414,405,000        $913,287,000          $314,536,000      $359,259,000 


Recoinage  of  gold  during  the  period 
Recoinage  of  silver 
Production  of  gold  " 

Production  of  silver  " 

Gold  coinage  less  recoinage 
Silver  coinage  less  recoinage 


$190,000,000 
145,000,000 
877,554,000 
738,187,000 

1,228,405,000 
768,287,000 


An  examination  of  these  figures  shows: 

1.  The  value  of  the  production  of  gold  exceeded  that  of 
silver  for  this  period  $139,367,000. 

2.  The  coinage  of  gold  exceeded  its  production  $536,851,- 
000,  and  the  coinage  of  gold,  less  recoinage,  exceeded  its  pro- 
duction by  $350,851,000. 

3.  The  coinage  of  silver  exceeded  its  production  $175,- 
100,000,  and  the  coinage  of  silver,  less  recoinage,  exceeded  its 
production  by  only  $30,100,000. 

4.  While  the  demand  for  both  metals  was  in  excess  of 
the  production,  the  product  of  gold  was  but  62  per  cent,  of  the 
total  coinage,  and  about  71  per  cent,  of  the  coinage,  less  re- 
coinage;  but  the  production  of  silver  was  about  81  per  cent, 
of  the  total  coinage,  and  96  per  cent  of  the  coinage,  less  re- 
coinage. 

5.  The  gold  coinage  of  Germany  and  of  the  United  States 
amounted  to  nearly  one-half  of  the  gold  coinage  of  the  entire 


A  CHANGE  IN  CONDITIONS  131 

world.  If,  to  their  coinage  is  added  that  of  the  Scandinavian 
states  and  of  the  Netherlands,  which  began  to  coin  gold  in  this 
period,  the  total  is  more  than  one-half  of  the  gold  coinage  of 
the  world  in  this  period,  and  was  nearly  as  much  as  the  pro- 
duction. 

It  is  unfortunate  that  there  are  no  sufficiently  authentic 
statements  of  the  relative  coinage  of  the  world  for  the  period 
of  ten  years  preceding  1873,  for  the  purposes  of  comparison, 
but  we  have  already  seen  that  it  was  a  period  characterized 
by  an  abundance  of  gold,  when  Great  Britain  was  the  only 
country  of  consequence  maintaining  a  gold  standard,  and  by  a 
scarcity  of  silver  everywhere  except  in  the  far  East. 

The  change  in  the  conditions  is  apparent.  It  is  unfortunate 
also,  that  it  is  impossible  to  secure  any  definite  data  as  to  the 
amount  of  gold  and  silver  consumed  in  the  industrial  arts  in 
this  period.  It  has  been  variously  estimated,  and,  even  adopt- 
ing the  minimum,  it  must  have  amounted  to  $40,000,000  for 
gold  and  $20,000,000  for  silver.  Recent  investigations  by  the 
Bureau  of  the  Mint  indicate  that  in  recent  years  the  United 
States,  England,  Erance,  and  Switzerland  alone  annually  con- 
sume in  the  arts  bullion  worth  as  much  as  that  above  estimated 
for  the  whole  world  before  1873,  so  that  the  estimate  can 
hardly  fail  to  be  on  the  safe  side.  If,  then,  from  the  gold  pro- 
duction of  the  years  1873-80  is  deducted  bullion  to  the  value 
of  $320,000,000,  and  from  the  silver  production  bullion  to  the 
value  of  $160,000,000,  the  amount  left  available  for  money 
would  be,  of  gold,  but  about  45  per  cent,  of  the  coinage,  less 
recoinage,  and  of  silver  but  70  per  cent. 

Under  these  circumstances  it  would  have  been  irrational  to 
have  expected  an  actual  decline  in  the  value  of  either  metal, 
as  compared  with  most  commodities  of  commerce,  but  it  would 
have  been  the  natural  thing  to  expect  a  change  in  the  relative 
value  of  the  two  metals.  Although  both  were  demanded  in 
excess  of  their  production,  the  demand  for  gold  suddenly  be- 


132 


AWAKENING  IN  THE  UNITED  STATES 


came  pressing,  while  that  for  silver  suddenly  relaxed.  But  this 
relaxation  could  not  have  been  due  to  reduced  coinage  during 
the  first  part  of  the  period.  It  was  not  till  1880  that  the  pro- 
duction of  silver  began  to  exceed  its  coinage.  It  is  difficult,  if 
not  impossible,  to  find  a  reason  for  believing  that  the  value 
of  silver  suffered  any  perceptible  decline,  as  measured  by  the 
price  of  articles  of  commerce,  until  long  after  that  time.  But 
as  compared  with  goM  the  demand  for  silver  fell  behind,  and 
the  world  hastened  to  aggravate  the  situation. 

From  a  carefully  prepared  table  submitted  to  the  Inter- 
national Conference  of  1881  by  Dr.  Broch,  of  iSTorway,  it  ap- 
pears that  the  total  value  of  silver  imported  into  India  from 
1855  to  1880  was  $1,086,259,300,  and  of  gold  $481,781,000, 
while  the  total  amount  of  council  bills  sold  in  London  during 
the  period  was  equivalent  to  $902,456,000.  The  average  an- 
nual importations,  therefore,  were  of  silver  about  $43,450,300, 
and  of  gold  about  $15,271,000,  and  the  average  amount  of 
council  bills  sold  about  $36,098,000.  But  a  striking  change 
took  place  about  1870.  The  table  shows  the  following  for  the 
Indian  fiscal  years  1870  to  1880: 


Fiscal 

Importation 

Importation 

Council  Bills 

Average  Ratio, 

Year. 

of  Silver. 

of  Gold. 

Bold  in  London. 

Silver  to  Gold, 

London  market. 

1870-71 

$12,511,400 

813,467,000 

$42,347,000 

15.58 

1871-72 

37,600,000 

17,297,000 

49,290,000 

15.55 

1872-73 

9,089,800 

12,692,000 

69,090,000 

15.71 

1873-74 

19,476,800 

8,980,000 

67,069,000 

16.00 

1874-75 

28,444,400 

10,111,000 

55,178,000 

16.28 

1875-76 

16,280,000 

8.888,000 

64,761,000 

16.85 

1876-77 

46,962,400 

6,989,000 

69,832,000 

17.56 

1877-78 

74,151,900 

7,642,000 

54,830,000 

17.37 

1878-79 

26,315,300 

9,401,000 

77,855,000 

18.33 

1879-80 

45,143,500 

9,923,000 

86,245,000 

18.18 

Total, 

Total, 

1855-70 
Annual 
Average, 

1855-70 

1870-80 


8315,975,500      8105,390,000      8636,497,000 


8772,213,800      8376,391.000      8265,959,000 


8-51,480,920 
31,597,550 


825,092,730 
10,539,000 


817,730,600 
63,649,700 


INCREAS2D  SALE  OP  COUNCIL  BILLS  133 

Some  important  facts  are  obvious  from  this  table.  During 
the  period  of  fifteen  years  ending  in  1870,  India  absorbed  more 
than  twice  as  much  silver  as  she  did  in  the  next  ten  years;  for 
the  latter  period  the  annual  importations  averaged  over  $20,- 
000,000  less  than  the  annual  average  of  the  former  period, 
and  this  notwithstanding  the  increased  importations  from 
1877  to  1880,  by'reason  of  the  severe  famine  that  prevailed  in 
southern  and  western  India.  Otherwise  the  importations  of 
the  latter  period  would  have  been  materially  less.  During 
these  three  years  of  famine  silver  ornaments  to  the  value  of 
332  lacs  of  rupees,  or  about  $16,000,000,  were  brought  to 
the  Bombay  mint  to  be  converted  into  rupees,  so  that  the  de- 
mand for  silver  was  urgent,  and  yet  in  only  one  year  did  the 
value  of  silver  imported  exceed  the  annual  average  of  the 
period  from  1855  to  1870.  In  the  ten  years  1861-70  India  im- 
ported $200,000,000  more  of  silver  than  in  the  ten  years 
1871-80. 

The  cause  of  this  decline  is  apparent  from  the  change 
which  took  place  about  1870  in  the  amount  of  council  bills 
sold.  As  remittances,  these  bills,  sold  to  settle  India's  debt  to 
England,  took  the  place  of  bullion,  and,  merchants  finding 
them  more  convenient  than  silver,  they  were  sold  in  the  ten 
years  from  1870  to  1880  to  a  value  of  nearly  twro  and  one-half 
times  that  of  the  preceding  fifteen  years,  and  the  annual  aver- 
age sold  in  the  seventies  was  nearly  four  times  that  from  1855 
to  1870.  This  $45,000,000  worth  of  silver  withheld  from 
the  Indian  market  annually  by  the  sale  of  council  bills  repre- 
sented one-half  of  the  annual  product  of  the  world  during 
much  of  the  decade.  The  difference  in  India's  absorption  of 
gold  between  the  two  periods  may  be  accounted  for  partly  by 
the  increase  in  the  sale  of  council  bills,  partly  because  of  the  in- 
creased demand  for  gold  in  Europe  and  America,  and  partly 
because  silver  became  cheaper.  During  the  period  of  greatly 
increased  gold  production,  while  silver  was  worth  more  than 


134  AWAKENING  IN  THE  UNITED  STATES 

gold  at  the  ratio  of  15.50  to  1,  remittances  in  gold  were  easy 
and  natural;  India  absorbed  a  vast  treasure  and  kept  it.  This 
only  served  to  aggravate  the  stringency  in  the  market  when  the 
demand  for  gold  was  suddenly  increased. 

No  responsibility,  however,  for  the  decline  of  silver,  as 
compared  with  gold,  during  this  period  can  be  laid  at  the  doors 
of  the  United  States,  unless  it  be  because  ef  their  increased 
production  of  the  metal.  In  no  five  years  in  the  previous  his- 
tory of  the  mint  was  one-half  the  silver  coined  that  was  coined 
in  the  five  years  following  the  so-called  Demonetization  Act  of 
1873,  and  not  till  1883  was  as  much  coined  under  the  Bland- 
Allison  Act  as  was  coined  in  the  year  preceding  its  enactment. 

Moreover,  if  the  available  statistics  are  correct,  the  net  re- 
sult of  Germany's  monetary  operations  could  not  alone  have 
occasioned  a  serious  surplus  in  the  silver  market.  Baron  von 
Thielmann,  the  German  delegate  to  the  conference  of  1881, 
reported  that  up  to  the  end  of  1880  the  government  had  sold 
in  round  numbers  $135,000,000  of  fine  silver.  But  the  silver 
exports  for  the  years  1873-81  are  reported  as  amounting  to  but 
$93,000,000,  while  the  imports  were  $87,000,000,  and  the 
German  production  of  silver  amounted  to  $50,000,000.  The 
imports  and  productions,  less  the  exports,  leaves  about  $44,- 
000,000  as  Germany's  net  absorption  of  silver  during  those 
eight  years  when  she  was  supposed  to  be  flooding  the  market. 
The  imperial  silver  coinage  for  the  same  time,  on  the  same  au- 
thority, amounted  to  427,000,000  marks,  or  about  $102,000,- 
000.  The  total  amount  of  old  coins  withdrawn  and  delivered 
to  the  mint  to  be  made  into  imperial  coins  was,  up  to  the  end  of 
1880,  only  about  $90,000,000,  and  it  is  doubtful  if  all  of  this 
had  left  the  mints  by  that  time ;  so  that  if  Germany  did  not  con- 
sume in  her  imperial  coinage  any  new  silver,  she  at  least  ab- 
sorbed the  metal  for  industrial  or  other  purposes  to  the  value 
of  $44,000,000  during  the  eight  years. 

Summarizing   these   statements  of   the   commercial    and 


FORCING  THE  METALS  APART 


135 


monetary  conditions  of  the  seventies  as  compared  with  the 
sixties,  the  following  facts  tending  to  enhance  the  demand 
and  value  of  gold  as  compared  with  silver  will  be  observed : 


1.  Decrease  in  the  production  of  gold 


.     $112,000,000 


2.  Gold  coinage  in  excess  of  its  production  (1873-1880) 

over  and  above  silver  coinage  in  excess  of  its  pro- 
duction       300,000,000 

3.  Increase  in  the  production  of  silver        .          .          .       411,000,000 

4.  Decrease  in  India's  absorption  of  silver          .          .       200,000,000 

5.  Increase  in  the  sale  of  council  bills  over  and  above 

the  decrease  in  silver  remittances      .         .         .       194,000,000 

All  these  conditions  prevailing  together  tended  to  force 
the  two  metals  from  that  relationship  as  to  value  that  had 
been  maintained  for  a  long  period.  It  is  doubtful  if  any  two 
of  them  \vould  have  seriously  disturbed  that  relationship,  but 
all  together  the  disturbance  became  inevitable.  If  the  in- 
creased demand  for  the  coinage  of  gold  had  not  occurred,  the 
relationship  might  have  withstood  the  other  phenomenal  ten- 
dencies. Indeed,  the  surprising  thing  about  it  is  that,  in 
the  face  of  these  tendencies,  the  change  in  the  relative  value 
of  the  two  metals  was  so  slight  in  the  seventies,  and  the  only 
explanation  of  it  is  that  silver  was  still  demanded  for  industry 
and  coinage  to  an  amount  in  excess  of  the  available  supply. 
The  following  table  shows  the  average  quotation  of  bar  sil- 
ver in  London  per  ounce  British  standard  (.925)  and  the 
equivalent  in  United  States  gold  coin  of  an  ounce  1000  fine  at 
the  average  price  during  the  two  periods  of  1861-70  and  1871- 
80: 


1861 
1862 
1863 
1864 
1865 
1866 
1867 
1868 
1869 
1870 


60U 


50* 


60 


1.333 

1871 

1.346 

1872 

1.345 

1873 

1.345 

1874 

1.338 

1875 

1.339 

1876 

1.328 

1877 

1.326 

1878 

1.325 

1879 

1.328 

1880 

60* 

59J 

58* 

52| 


52* 
6H 


1.326 
1.322 
1.298 
1.278 
1.246 
1.156 
1.201 
1.152 
1.123 
1.145 


136  AWAKENING  IN  THE  UNITED  STATES 

Some  facts  which  appear  from  this  table  are: 

1.  From  1861  to  1870  the  average  price  varied  within  two 
cents  and  one  mill  per  ounce,  the  net  decline  being  only  seven 
mills,  though  the  production  increased  20  per  cent. 

2.  While  the  average  price  fell  below  the  French  coining 
ratio  in  1867,  it  was  not  till  1874  that  it  fell  below  the  coining 
ratio  of  the  United  States. 

3.  The  first  heavy  fall  occurred  in  1873;  it  corresponded 
with  an  increase  in  production  of  about  25  per  cent.,  yet  the 
price  fell  only  two  mills  when  the  production  of  1871  ex- 
ceeded that  of  1870  by  19  per  cent.;  and  the  price  in  1871  was 
actually  a  mill  higher  than  in  1869,  though  the  production 
was  28  per  cent,  greater. 

4.  Though  the  production  in  1872  was  nearly  50  per  cent, 
more  than  in  1869,  the  average  price  in  the  former  year  was 
but  one-eighth  of  a  penny,  or  about  a  quarter  of  a  cent  lower 
than  in  the  latter. 

5.  Though  the  production  in  1880  was  more  than  double 
that  of  1869,  the  average  price  in  the  former  year  was  only 

-18  cents  an  ounce  lower  than  in  the  latter. 

The  inevitable  conclusion  from  these  facts  is  that  the  in- 
creased production  would  have  had  little  influence  on  the  price 
of  silver  had  not  the  demand  for  gold  been  suddenly  increased 
and  the  demand  for  silver  been  suddenly  relaxed  by  the  closing 
of  mints  to  it  in  Europe,  and  by  the  increased  sale  of  coun- 
cil bills  in  India.  Here  the  reader  will  perceive  the  basis  for 
one  of  the  main  arguments  for  the  practicability  of  bimetal- 
lism, which  developed  into  such  prominence  in  the  decade 
we  are  about  to  consider. 

In  resuming  the  study  of  the  course  of  events  among  the 
nations,  Europe  naturally  demands  attention  first,  for,  as  has 
been  noted,  the  action  of  the  conference  of  1867  was  quickly 
followed  by  an  earnest  discussion  of  the  question  of  the  stand- 
ards, the  general  belief  in  the  advantages  of  the  gold  standard 


BELGIUM  PERPLEXED  137 

abiding,  however,  notwithstanding  the  warnings  and  argu- 
ments of  a  new  school  of  able  and  zealous  bimetallists.  When, 
after  the  German  and  Scandinavian  monetary  reforms,  the 
commercial  value  of  silver  began  to  fall  seriously  below  its 
coining  value  at  the  ratio  of  the  Latin  Union,  the  European 
governments  ceased  to  regard  the  subject  with  complacency. 
But  in  the  United  States,  where  silver  still  commanded  a  bet- 
ter price  in  the  markets  than  the  mints  would  have  yielded, 
had  its  coinage  been  free,  and  while  the  government  was  ab- 
sorbing as  large  a  part  of  the  production  of  the  country  as  it 
could  secure  in  the  coinage  of  trade  dollars  and  fractional  coins 
to  take  the  place  of  "  shinplasters,"  the  subject  of  standards 
awakened  no  controversy  —  indeed,  was  either  unheard  of  or 
regarded  with  indifference. 

Xo  European  government  was  more  perplexed  than  Bel- 
gium. It  had  long  been  a  partisan  of  the  gold  standard,  and 
was  bound  by  treaty  to  the  double  standard  of  the  Latin 
Union.  In  1873  it  found  on  one  side  Germany,  seeking  gold 
and  discarding  silver,  and  on  the  other  France,  its  monetary 
ally  and  the  holder  of  much  of  its  coinage.  Its  mints  were 
open  to  silver  at  the  ratio  of  15.50  to  1,  and  commercially  it 
was  fluctuating  wildly  and  barely  averaging  better  than  16 
to  1.  Immediately  after  the  passage  of  the  German  coinage 
act,  the  Belgian  Minister  of  Finance  asked  the  Bank  of  Bel- 
gium what  measures  could  be  taken  to  parry  the  effects  of  the 
apparently  inevitable  depreciation  of  silver.  The  directors 
unanimously  replied  that  they  were  in  favor  of  the  single 
standard,  regarding  the  simultaneous  use  of  two  different  and 
variable  metals  in  measuring  values  as  an  attack  upon  logic 
and  good  sense.  A  monetary  commission  was  appointed,  and 
at  its  sessions  the  bimetallists  pleaded  their  cause  with  fervor. 
"  Debtors,  and,  among  them,  the  state,"  said  Professor  Lave- 
leye,  Belgium's  most  celebrated  economist,  "  have  the  right  to 
pay  in  gold  and  silver,  and  this  right  cannot  be  taken  away 


138  AWAKENING  IN  THE  UNITED  STATES 

without  disturbing  the  relation  of  debtors  and  creditors  to 
the  prejudice  of  debtors,  to  the  extent  of,  perhaps,  one-half, 
certainly  of  one-third.  To  increase  all  debts  at  a  blow  is  a 
measure  so  violent,  so  revolutionary,  that  I  cannot  believe 
the  government  will  propose  it  or  that  the  Chambers 
will  vote  it."  But,  while  the  commission  disagreed  with  him, 
no  way  could  be  found  to  safely  break  with  the  Latin  Union, 
and  during  the  whole  year  the  Belgian  mint  was  kept  busy, 
coining  over  100,000,000  francs  of  silver,  but  not  a  franc  in 
gold. 

France  was  in  a  peculiar  position.  Demoralized  by  defeat 
and  the  fall  of  the  empire,  its  capital  for  a  time  under  a  com- 
munal reign  of  terror,  and  the  resources  of  the  whole  nation 
strained  to  pay  the  indemnity  demanded  by  the  Germans, 
there  was  little  opportunity  for  the  consideration  of  any  ques- 
tions save  those  of  reconstruction.  It  was  not  till  January, 
1874,  when  Thiers  had  succeeded  in  bringing  some  order  out 
of  the  chaos  of  conflicting  policies,  that,  in  view  of  the  appeals 
of  other  states,  the  representatives  of  the  Latin  Union  were 
called  together.  Again  did  Belgium  and  Switzerland  plead 
for  the  adoption  of  the  gold  standard,  claiming  that  if  their 
advice  had  been  followed  in  1865  the  union  would  not  have 
found  itself  in  a  position  requiring  defence.  But,  though 
Parieu  and  others  long  identified  with  the  monetary  policy  of 
France  favored  gold,  the  bimetallists  now  preponderated  in  in- 
fluence. They  pointed  out  that  the  adoption  of  the  gold  stand- 
ard by  the  union  would  further  depreciate  the  value  of  silver, 
of  which  so  much  was  in  the  hands  of  the  people;  besides, 
France  had  suspended  specie  payments,  and,  naturally,  did 
not  desire  the  demonetization  of  one  of  the  precious  metals 
which  had  always  been  sought  for  by  the  people,  and  had  so 
recently  answered  the  purpose  of  paying  a  considerable  portion 
of  the  war  indemnity.  The  result  was  a,  compromise.  On 
the  30th  of  January  a  treaty,  supplementary  to  that  of  1865, 


THE  STBUGGLE  IN  HOLLAND  139 

was  adopted,  whereby  it  was  agreed  that  the  coinage  of  the 
union,  exclusive  of  subsidiary  coins,  should  be  limited  to 
140,000,000  francs.  The  proportion  was  fixed  at  12,000,000 
francs  for  Belgium,  60,000,000  for  France,  40,000,000  fort 
Italy,  and  8,000,000  for  Switzerland,  and  by  a  special  article 
Italy  was  allowed  to  coin  for  the  reserve  of  her  national  bank 
an  additional  20,000,000  francs.  The  delivery  of  coins  upon 
mint  receipts  from  December  31,  1873,  was  made  applicable 
upon  these  quotas.  But  while  these  limits  were  fixed,  any 
country  might  decline  to  coin  the  quota  assigned  to  it,  and 
Belgium  and  Switzerland  did  so. 

The  government  of  the  Netherlands  was  not  content  with 
the  law  of  May,  1873,  which  simply  suspended  the  coinage  of 
silver  except  on  government  account,  and,  in  accordance  with 
the  advice  of  its  monetary  commission,  kept  pressing  for  the 
adoption  of  the  gold  standard  and  the  sale  of  existing  florins. 
But  the  two  chambers  favored  a  provisional  monetary  law,  and 
such  was  passed  in  June,  1875.  It  introduced  into  the  coinage 
a  10-florin  gold  piece  of  full  legal  tender,  to  be  freely  coined 
(though  subject  to  the  convenience  of  the  state)  on  the  basis 
of  6.048  grammes  fine,  being  equal  to  10  florins,  or  at  the  ratio 
of  15f  to  1.  The  act  also  provided  for  the  suspension  of  silver 
coinage  till  the  end  of  1876,  but  the  States-General  would  not 
agree  to  the  calling  in  of  silver  coins  to  be  melted  and  put  on 
the  market.  Just  at  that  time  silver  coins  occupied  a  peculiar 
position  in  Holland,  their  value  being  regulated  neither  by 
the  market  value  of  gold  nor  by  that  of  silver.  For  some 
reason  the  demand  for  coin  greatly  increased  between  1873 
and  1875,  so  that  in  the  latter  year,  while  the  value  of  silver 
as  a  metal  was  declining  in  the  market,  Dutch  silver  coins  were 
appreciated  as  against  gold,  the  rate  of  exchange  on  London 
falling  as  low  as  11.12  florins  to  the  pound  sterling.  This 
situation  was  not  helped  by  the  new  gold  coins  minted  in  the 
latter  half  of  1875  and  1876,  for  they  were  not  used  in  internal 


140  AWAKENING  IN  THE  UNITED  STATES 

circulation,  but  were  kept  in  reserve.  Silver  and  paper  florins 
constituted  the  currency  of  the  country  except  for  foreign  ex- 
change. But  the  government,  though  considering  the  general 
adoption  of  the  gold  standard  a  mistake,  thought  that  Hol- 
land's interests  could  be  protected  only  by  disposing  of  its 
silver  before  it  depreciated  further,  and  by  making  the  metallic 
currency  of  full  legal  tender  consist  entirely  of  gold.  So  an- 
other bill  was  introduced  by  which  authority  was  given  to  the 
executive  not  only  to  coin  gold,  but  also  to  withdraw  silver 
from  circulation  and  to  sell  it  in  such  a  manner  and  to  such 
an  extent  as  might  be  deemed  necessary.  After  a  prolonged 
debate  it  was  carried  through  the  lower  house  by  a  vote  of  37 
to  35,  but  was  rejected  in  the  first  chamber,  which  strongly 
objected  to  an  eventual  demonetization  and  sale  of  silver, 
deeming  it  the  proper  course  not  to  enter  into  any  fresh  legisla- 
tion on  the  subject,  but  simply  to  prolong  the  provisional  law 
of  1875.  Under  these  circumstances  there  was  nothing  for 
the  government  to  do  but  to  bring  in  a  bill  proposing  the  re* 
newal  of  the  law  of  1875  for  another  twelve  months,  and  in 
doing  so  it  gave  the  States-General  to  understand  that  in  the 
course  of  that  further  twelve  months  another  attempt  would  be 
made  to  settle  the  matter  finally;  but  when  the  time  came  the 
conditions  had  so  changed,  there  being  a  general  European 
awakening  to  the  gravity  of  the  situation,  that  the  government 
considered  it  sufficient  to  prolong  the  suspension  of  silver  coin- 
age till  otherwise  provided  by  law,  and  a  bill  to  that  effect  was 
adopted  by  both  chambers  late  in  1877. 

This  change  in  the  situation  was  due  to  the  indications  of 
extreme  anxiety  among  all  the  commercial  nations  as  to  the 
future  effect  of  the  continued  demonetization  and  consequent 
depreciation  of  silver.  Such  distinguished  economists  as  Wo- 
lowski,  Courcelle-Seneuil,  and  Cernuschi  in  France,  Seyd  in 
England,  Laveleye  in  Belgium,  and  TV.  C.  Mees  in  Holland, 
had  been  waging  a  persistent  and  vigorous  warfare  in  the  re- 


HOLLAND  SEEKS  A  BIMETALLIC  CONFERENCE  141 

views  against  the  exclusive  gold  standard  and  in  favor  of  a 
new  doctrine,  international  bimetallism;  its  effect,  taken  with 
that  of  the  depreciation  of  silver  and  the  uncertainties  of  ex- 
change, was  to  produce  a  state  of  doubt  as  to  the  desirability 
of  the  exclusive  gold  standard,  or  of  actual  belief  in  the  neces- 
sity of  the  general  adoption  of  the  double  standard.  At  least 
as  early  as  1875  these  economists  had  urged  the  calling  of 
another  international  conference  to  undo  the  results  of  that  of 
1867,  maintaining  the  position  that,  if  all  civilized  nations 
were  to  adopt  the  double  standard,  with  a  uniform  proportion, 
a  stability  in  the  respective  values  of  the  two  metals  would  be 
created  such  as  could  not  be  attained  in  any  other  way. 

Commercial  bodies  all  over  Europe  began  to  take  up  the 
question  late  in  1875.  At  a  convention  of  the  Society  of  the 
Netherlands  for  the  Promotion  of  Industry  held  at  Devanter 
the  opinion  prevailed  that  a  serious  danger  threatened  the 
monetary  circulation,  not  only  of  the  Netherlands  and  her 
colonies,  but  of  all  civilized  nations.  The  delegates  shared 
the  opinion  of  the  government  that  under  the  existing  circum- 
stances the  Netherlands  had  no  alternative  but  to  adopt  the 
gold  standard,  but  they  voted  to  address  the  King  as  to  the 
desirability  of  securing  an  international  understanding  or 
agreement  for  the  adoption  of  the  double  standard,  deeming  it 
the  only  way  to  check  the  depreciation  of  the  white  metal. 
The  address  was  presented  to  the  King  in  July,  187G.  After 
treating  of  the  stability  in  the  relative  value  of  the  two  metals 
during  the  great  increase  in  the  production  of  gold,  and  at- 
tributing it  to  the  fact  that  the  mints  of  so  many  nations  were 
open  to  the  coinage  of  both  gold  and  silver,  and  expressing  the 
belief  that  the  same  result  would  follow  the  general  re-open- 
ing of  the  mints  to  silver,  the  address  continued : 

"  In  view  of  all  the  advantages  we  have  here  enumerated,  ad- 
vantages which,  in  our  judgment,  are  far  from  being  imaginary, 
would  it  not  be  desirable  to  convene,  at  an  early  day.  not  a  diplo- 
matic congress,  but  an  international  monetary  conference,  to  which 


143  AWAKENING  IN  THE  UNITED  STATES 

all  governments  might  send  men  specially  qualified  for  the  service 
and  most  conversant  with  the  subject?  To  such  a  conference,  the 
two  following  questions  might  be  submitted: 

"  Is  it,  or  not,  probable  that  if  all  civilized  nations  were  to  adopt 
the  double  standard,  with  a  uniform  proportion  of  15.50  to  1,  as 
the  intrinsic  value  of  gold  and  silver  legal-tender  money,  a  stability 
in  the  relative  value  of  the  two  metals  would  be  thus  obtained  during 
a  long  period  of  time,  which,  if  not  absolute,  would  certainly  be  very 
great;  and  that  the  oscillations  of  that  value  would  be  very  small 
compared  with  those  which  have  taken  place  during  the  course  of  the 
present  century. 

"  If  this  question  should  be  decided  in  the  affirmative,  what  meas- 
ures should  be  submitted  to  the  several  governments,  iii  order  to 
secure  this  desired  uniformity? 

"  Without  anticipating  the  answer  which  competent  judges  might 
give  to  these  questions,  we  venture  to  express  the  opinion  that  it 
would  not  be  desirable  to  agitate,  at  the  same  time,  the  question  of 
the  unification  of  coinage.  Every  country  holds,  with  a  certain 
tenacity,  to  its  national  money,  around  which  its  historical  tradi- 
tions cluster;  and  the  attempt  to  combine  on  a  new  international 
monetary  unit  would  meet  with  a  formidable  opposition  in  nearly  all 
countries  against  any  unification  of  moneys. 

"  The  several  countries  should  simply  engage  that,  if  they  have 
the  single  gold  standard,  they  will  add  to  it  legal  coins  of  silver; 
if  they  have  the  silver  standard,  that  they  will  add  to  it  legal  coins 
of  gold,  with  a  uniform  proportion  of  15.50  to  1.  Countries  having 
the  double  standard,  but  a  different  proportion  than  that  of  15.50  to 
1,  would  be  required  to  conform  to  that  proportion.  In  all  countries 
of  the  monetary  union  all  debts  should  be  payable  indifferently  in 
money  of  one  or  the  other  rnetal;  individuals  should  have  the  right 
to  have  bullion  of  either  metal  converted  into  legal  tender  coin,  ac- 
cording to  the  statutory  conditions  prevailing  in  each  country. 

"  The  government  which  shall  gain  the  adhesion  of  other  govern- 
ments to  the  plan  of  convoking  an  international  monetary  conference 
will,  in  our  opinion,  render  an  eminent  service,  not  only  to  its  own 
citizens,  but  to  all  countries  of  the  world. 

"According  to  a  communication  made  by  the  Minister  of  Finance, 
in  the  month  of  May,  1870,  it  appears  that  the  government  of  your 
Majesty  has  considered  the  plan  of  an  international  agreement,  look- 
ing to  the  general  adoption  of  the  double  standard,  but  has  decided 
that  all  attempts  in  that  direction  would  be  without  avail.  Since 
that  time,  however,  the  depreciation  of  silver  has  gone  so  much 
further  tnan  before  that  a  new  attempt  would  perhaps  meet  with  a 
more  favorable  reception." 

It  appears,  therefore,  that  as  Mees,  of  the  Netherlands,  was 
the  first  to  advocate  a  plan  of  international  bimetallism,  so  the 
first  governmental  suggestion  of  an  international  conference  in 
behalf  of  a  general  bimetallic  arrangement  came  from  his  gov- 
ernment before  many  in  the  United  States  had  really  awak- 
ened to  the  fact  that  something  had  happened  to  silver.  In 


PROSPERITY  OF  FRANCE  143 

sounding  the  other  governments  the  Dutch  ministers  found 
that  they  either  regarded  the  project  with  disfavor  or  as  pre- 
mature, and  the  natural  conclusion  was  that  the  attempt  would 
be  futile.  While  the  economists  were  tearing  each  other's 
opinions  into  shreds,  financial  circles  were  balancing  on  a 
doubt  and  statesmen  were  perplexed.  The  old  gospel  of  the 
gold  standard  had  not  lost  its  force;  a  double  standard  of  vary- 
ing values  as  a  measure  of  other  values  seemed  as  illogical 
and  absurd  as  ever. .  But  they  began  to  wonder  if,  after  all,  it 
might  not  be  practicable.  The  doctrine  that  gold  was  the 
natural  standard  of  the  stronger  and  richer  nations,  and  silver 
of  the  weaker  and  poorer  nations,  was  still  extensively  held  by 
financiers,  but  the  proud  Germans,  who  had  put  their  currency 
on  a  par  with  England's,  were  perplexed  and  in  doubt  when 
France,  after  spending  11,000,000,000  francs  on  an  unsuccess- 
ful war  and  suffering  the  losses  of  a  reign  of  terror,  began  to 
prosper  beyond  the  other  nations  of  the  earth,  gathering  stead- 
ily and  without  any  apparent  effort  a  rich  harvest  of  gold, 
while  her  mints  wrere  either  freely  open  to  silver,  or,  after 
1874,  to  as  much  as  60,000,000  francs  a  year.  The  following 
extract  from  a  letter  of  December  4,  1874,  from  the  United 
States  Minister  at  Paris,  Mr.  Washburne,  to  Hamilton  Fish, 
Secretary  of  State,  is  instructive  at  this  point : 

"  The  exportations  from  France  of  this  year  will  amount  to  a  fab- 
ulous sum.  Notwithstanding  the  enormous  taxes,  the  financial  con- 
dition of  the  country  is  a  marvel  to  the  nations.  All  the  countries 
of  Europe  are  complaining  that  France  is  gaining  all  the  gold.  The 
condition  of  the  Bank  of  France  excites  the  wonder  and  admiration 
of  all  financial  men.  It  is  a  long  time  since  specie  payments  have 
been  practically  resumed.  Five-franc  bank-notes  have  gone  out  of 
circulation,  and,  for  months,  the  bank  has  not  paid  out  any  20-franc 
notes.  It  will  probably  not  be  long  before  the  whole  circulation 
under  50  francs  will  be  in  gold  and  silver.  All  these  results  have 
been  accomplished  without  talk,  boasting,  or  parade,  and  what  a 
humiliating  contrast  it  is  to  us!  Proclaiming  ourselves  constantly 
the  "  greatest,  richest,  freest,  noblest "  government  on  the  face  of 
the  earth,  our  promises  to  pay  are  to-day  at  12  per  cent,  discount." 

There  were,  at  the  lowest  estimate,  fully  1,500,000,000 


144  AWAKENING  IN  THE  UNITED  STATES 

francs  of  silver  of  full  legal  tender  in  France  at  that  time, 
and  about  500,000,000  in  the  vaults  of  the  bank.  It  is  not 
strange,  therefore,  that  opinion  in  France  was  very  much  di- 
vided as  to  the  proper  course  to  pursue.  The  depreciation  of 
silver  threatened  her  currency;  still  she  was  wonderfully  pros- 
perous. Neighboring  nations  threatened  to  pour  their  dis- 
carded silver  into  her  mints  and  take  away  her  gold;  still  the 
gold  kept  flowing  to  her.  Her  confederates  in  the  Latin 
Union  were  pleading  with  her  to  at  once  adopt  the  gold  stand- 
ard, and  so  were  some  of  her  own  ablest  statesmen;  but  if  she 
did,  what  would  become  of  her  immense  stock  of  silver,  and 
how  could  Belgium  and  Switzerland  redeem  all  their  silver 
circulating  in  France  and  held  in  the  bank? 

The  battle  of  the  standards  never,  perhaps,  waged  so 
fiercely  anywhere  as  it  did  in  France  at  that  time.  Conspicu- 
ous on  the  side  of  gold  were  Chevalier,  Parieu,  Victor  Bonnet, 
Frederic  Passy,  and  Leroy-Beaulieu,  and  they  had  for  their 
organs  the  Journal  des  Debats  and  the  Economiste.  On 

O 

the  other  side  were  Leon  Say,  Magne,  Wolowski,  Andre, 
Courcelle-Seneuil,  and  Cernuschi,  having  for  their  organs  the 
Sieclc  and  the  Repiiblique  Frangais.  Leon  Say,  while  a  bi- 
metallist,  was  a  conservative  one,  and  opposed  keeping  the 
French  mints  open  to  silver  under  the  existing  circumstances ; 
indeed,  none  of  the  bimetallists  considered  their  system  prac- 
ticable without  the  co-operation  of  the  great  commercial  na- 
tions. Their  chief  fight  was  to  prevent  the  adoption  of  the 
gold  standard  by  France  or  any  other  nation.  In  this  condi- 
tion of  the  controversy  the  newly  elected  Chambers  met  early 
in  1876.  One  of  the  first  acts  of  the  Minister  of  Finance  was 
to  present  a  bill  empowering  the  government  to  restrict  the 
coinage  of  silver  in  so  far  as  it  might  be  deemed  necessary,  or, 
in  other  words,  not  to  avail  itself  to  the  full  extent  of  the  right 
granted  to  France  by  the  last  agreement  of  the  union.  It 
should  be  kept  in  view  that,  while  that  agreement  established 


RUSSIA  SUSPENDS  SILVER  COINAGE  145 

a  maximum  amount  of  coinage,  it  established  no  minimum, 
and  that  in  1874  and  1875  France  coined  the  maximum  al- 
lowed her  only  because  her  own  laws  did  not  allow  her  to  do 
otherwise.  The  object  of  the  bill  was  to  alter  this  state  of 
things.  It  \uas  brought  before  the  Senate  on  the  21st  of 
March,  and  gave  rise  to  a  long  and  interesting  debate  in  which 
Parieu,  so  long  eminent  because  of  his  special  knowledge  of 
monetary  matters,  attacked  the  principle  of  the  double  stand- 
ard vigorously,  while  Rouland,  Governor  of  the  Bank  of 
France,  with  marked  ability  defended  it.  The  bill  passed  and 
the  government  soon  began  to  avail  itself  of  its  privileges. 

The  actual  result  was,  therefore,  that  by  the  middle  of 
1876  none  of  the  mints  of  the  Latin  Union  were  open  to  the 
coinage  of  silver  except  that  of  Italy,  and  as  her  currency  was 
on  a  greatly  depreciated  paper  basis,  any  silver  coined  there 
was  immediately  exported.  Indeed,  between  1872  and  1876 
Italy  exported  more  silver  than  Germany  sold,  and  a  large 
part  of  it  went  into  France.  In  the  summer  of  1876,  Spain 
practically  severed  its  relationship  with  the  Latin  Union  by 
interdicting  the  coinage  of  silver  except  on  government  ac- 
count, the  government  at  the  same  time  declaring  its  inten- 
tion of  limiting  its  legal  tender  to  150  pesetas,  or  about  $28. 

Even  Russia,  though  nominally  maintaining  a  silver  stand- 
ard, was  compelled  to  suspend  the  coinage  of  silver  the  same 
year  by  a  state  of  things  both  peculiar  and  suggestive.  It  was 
brought  about  by  its  forced  currency  of  inconvertible  "  bills 
of  credit,"  the  name  which  Russian  paper  money  bears.  In 
July,  silver,  being  wcrth  48-J  pence  per  ounce  in  London,  was 
depreciated  as  compared  with  gold  27.12  per  cent.  The  gold 
half-imperial  was  worth  at  St.  Petersburg  in  Russian  paper 
six  roubles,  twenty-six  copecks,  the  paper  being  depreciated 
as  compared  with  gold  21.47  per  cent.  Thus  the  paper  was 
worth  more  in  gold  than  the  silver  it  nominally  represented. 

Under  these  conditions  it  became  profitable  to  send  silver  into 
10 


146  AWAKENING  IN  THE  UNITED  STATES 

Russia  to  be  transformed  into  metallic  roubles.  With  1000 
paper  roubles  one  could  buy  a  draft  on  London  for  £130  Is. 
6(/.,  and  that  would  buy  664j£  ounces  of  silver,  which  at  the 
Russian  mints  gave  the  right  to  receive  1061  roubles,  67  co- 
pecks, a  profit  of  over  6  per  cent.,  and  by  virtue  of  the  lawr 
the  silver  money  was  like  the  bills  of  credit  received  at  a 
nominal  price.  The  government,  therefore,  very  quickly  sus- 
pended the  coinage. 

Manifestations  of  concern  over  the  prevailing  monetary 
tendencies  appeared  in  England  as  early  as  anywhere.  Her 
cheerful  belief  that  the  gold  standard  was  the  only  logical  and 
proper  one  for  the  highly  civilized  began  to  be  disturbed  by 
the  conviction  that  her  enjoyment  of  it  depended  somewhat 
upon  her  success  in  keeping  it  as  exclusively  as  possible  for 
herself.  It  would  not  do  to  share  it  with  too  many  other  na- 
tions. When  it  was  seen  that,  in  spite  of  an  inconveniently 
high  rate  of  discount,  the  gold  of  the  Bank  of  England  con- 
tinued to  pass  into  France  and  the  United  States,  the  gov- 
ernmental policy  changed  from  one  of  gold  monometallism  for 
the  civilized  world  to  one  of  gold  monometallism  for  Eng- 
land anyhow,  Germany  if  necessary,  but  silver  or  bimetallism 
for  as  much  as  possible  of  the  rest  of  the  world.  While  that 
answered  the  purposes  of  a  policy,  it  did  not  prevent  an  accu- 
mulation of  embarrassments.  The  business  world  became 
aware  that  a  depression  of  trade  had  set  in;  manufacturing 
drooped;  the  demand  for  money,  of  course,  fell  off,  but,  instead 
of  the  discount  rates  falling,  as  would  be  naturally  expected, 
they  were  kept  artificially  high  for  the  protection  of  the  re- 
serves. A  bimetallic  sentiment  began  to  grow  and  flourish 
among  the  commercial  men  of  centres  like  Liverpool  and  Man- 
chester, while  the  government  began  to  be  importuned  with 
complaints  from  India.  Whereas,  for  twenty  years  before 
1873,  the  proportion  of  conversion  had  been  10  rupees  to  the 
pound  sterling,  in  1876  it  required  11.3  rupees  to  make  a 


ANXIETY  IN  ENGLAND  147 

pound.  This  necessitated  taking  10  per  cent,  more  money  out 
of  the  Indian  nation  to  pay  the  same  foreign  obligation. 

A  writer  in  the  Westminster  Review  in  January,  1876, 
speaking  of  the  demonetization  of  silver,  said  that  one  of  the 
things  involved  was  the  probable  appreciation  of  gold,  and, 
unless  fresh  discoveries  were  made,  debts  contracted  in  gold 
would  tend  to  press  more  heavily  on  the  borrowers,  and  that 
it  would  be  well  if  this  pressure  did  not  become  so  intolerable 
as  to  suggest  by  way  of  solution  something  like  universal  repu- 
diation. Writing  upon  the  same  subject,  the  president  of  the 
Liverpool  Chamber  of  Commerce  said :  "  It  will  practically 
beggar  all  nations  that  have  borrowed  in  silver  and  have  to 
pay  in  gold.  Money  values  would  fall  greatly;  national  debts 
like  our  own  would  press  much  more  heavily,  and  a  period  of 
suffering  and  contraction  of  business  would  ensue,  similar  to 
what  the  United  States  has  experienced  on  coming  painfully 
back  from  inflated  paper  towards  specie  payments.  Xo  doubt, 
at  last  the  process  would  be  accomplished,  and  after  a  century 
or  so  the  world  could  trade  as  well  on  gold  alone  as  gold  and 
silver  combined.  But  why  have  the  intermediate  chaos  if  it 
can  be  avoided?" 

But  the  government  was  less  concerned  about  the  woes  of 
debtors,  English  financiers  being  large  creditors,  than  it  was 
about  the  increasing  difficulties  of  its  trade  with  India.  The 
variations  in  exchange  had  already  made  trade  with  that  col- 
ony so  much  of  a  gamble  that  its  volume  was  affected  by  the 
uncertainty  of  profits,  and  as  the  Indian  government  was  seri- 
ously discussing  the  feasibility  of  suspending  silver  coinage, 
the  consequence  of  which  must  be  a  further  depreciation  of 
silver,  the  commercial  world  was  either  uncertain  or  fearful 
as  to  the  future. 

In  July,  1876,  the  Bengal  Chamber  of  Commerce  passed 
resolutions  advocating  the  suspension  of  silver  coinage,  and  the 
issue  of  notes  against  silver  bullion,  on  the  ground  that  it 


148  AWAKENING  IN  THE  UNITED  STATES 

was  a  necessary  precaution  for  the  government  to  take  for  the 
preservation  of  the  country's  currency,  and  to  prevent  the 
flood  of  silver  from  foreign  nations.  It  was  represented  that 
these  measures  were  no  more  stringent  than  the  first  financiers 
of  Europe  had  found  it  necessary  to  adopt.  A  memorial  was 
made  to  the  government,  and  in  this  the  Calcutta  Trades  As- 
sociation joined.  But  for  the  time  being  the  government  sim- 
ply urged  the  necessity  of  the  utmost  economy  of  the  public 
resources. 

Meanwhile  the  English  Parliament  had  felt  compelled  to 
consider  the  subject,  and  a  Select  Committee  on  the  Deprecia- 
tion of  Silver  was  appointed  in  March.  It  made  an  extensive 
investigation  and  reported  in  July.  Ko  remedial  measures 
were  suggested,  as  the  committee  had  been  authorized  simply 
to  examine  into  the  causes  of  the  fall  of  silver,  and  to  describe 
the  effect  upon  Anglo-Indian  exchange.  The  report  declared 
that  the  depreciation  had  at  least  four  causes:  the  German 
cause,  the  demonetization  of  silver  in  that  country;  the  French 
cause,  the  limitation  of  silver  coinage  by  the  Latin  Union ; 
the  American  cause,  the  increased  production  of  the  mines; 
and  the  Indian  cause,  the  falling  off  of  the  demands  for  coin 
from  India.  The  committee  was  inclined  to  minimize  the 
German  cause  in  its  effects  on  the  future,  believing  that  Ger- 
many would  still  require  a  large  amount  of  silver,  owing  to  the 
smaller  use  of  checks  and  to  the  habit  of  daily  payment  for  all 
family  expenses.  The  limitation  or  eventful  suspension  of 
silver  coinage  by  the  states  of  the  Latin  Union  was  regarded  as 
more  serious.  It  could  not  find  sufficient  reason  for  the  marked 
depreciation  in  the  increase  of  production,  saying:  "  Notwith- 
standing the  late  rise  in  the  production  of  silver  as  compared 
with  gold,  its  proportion  to  gold  is  still  considerably  below 
what  it  was  in  1848,  to  say  nothing  of  the  period  when  the 
proportion  was  3  to  1;  and  the  conclusion  seems  justified  that 
a  review  of  the  relations  of  the  metals  in  times  past  shows  that 


REPORT  OF  ENGLISH  SILVER  COMMISSION  149 

the  fall  in  the  price  of  silver  is  not  due  to  any  excessive  pro- 
duction as  compared  with  gold." 

Much  more  was  made  of  the  effect  of  the  marked  increase 
in  the  sale  of  council  bills  at  London.  It  was  pointed  out  that 
"  the  supply  of  a  different  form  of  remittance  —  namely, 
government  bills  —  has  superseded  to  a  great  extent  the  ne- 
cessity of  remitting  bullion;  .  .  .  the  effect  of  this  substitu- 
tion has  to  be  measured  in  very  large  figures It  will 

be  seen  that,  though  the  total  amount  of  treasure  and  bills  to- 
gether remitted  to  India  during  the  last  four  years  (1872-76) 
has  but  slightly  declined,  the  proportion  between  the  two 
has  been  entirely  reversed."  After  naming  £15,000,000  as 
the  then  average  sum  of  the  home  charges  due  from  the  Indian 
government,  the  report  remarks :  "  This  is  the  sum  which 
has  to  be  paid  annually  by  India  (on  state  account)  to  England, 
and  this  sum,  pro  tanto,  displaces  the  dispatch  of  bullion."  The 
statistics  given  in  the  report  show  that,  whereas,  in  the  four 
years  ending  1872,  the  annual  average  sales  of  council  bills 
had  been  only  £7,000,000  while  the  import  of  treasure  into 
India  had  been  ten  millions  per  annum,  in  the  four  years  end- 
ing 1876  the  sales  of  council  bills  had  been  increased  to  an  aver- 
age of  £12,600,000,  and  the  imports  of  treasure,  chiefly  silver, 
had  declined  to  £4,100,000  yearly,  or  less  than  one-half.  This 
displacement  of  silver,  therefore,  by  the  London  sales  of  coun- 
cil bills,  must  have  exerted  a  much  greater  effect  on  the  mar- 
ket at  first  than  the  German  sales  of  silver,  the  greater  part 
of  which  did  not  take  place  till  1877,  when  the  average  price 
of  silver  was  Iff/,  above  that  of  1876,  and  2t7.  above  that  of 
1878.  The  German  sales  from  1873  to  1880  amounted  to 
about  £27,000,000,  or  an  annual  average  of  only  about  £3,- 
400,000. 

The  cessation  gradually,  from  about  1868  to  1874,  of  the 
sterling  sums  paid  by  the  great  guaranteed  railway  companies 
into  the  treasury  of  the  India  office,  was,  no  doubt,  responsible 


150  AWAKENING  IN  THE  UNITED  STATES 

in  a  large  degree  for  the  increase  in  council  bills,  for  they  had 
been  a  set-off  to  the  home  charges.  There  was  no  evidence  that 
India  had  become  overstocked  with  silver,  and  the  committee 
said  in  its  report  that  the  use  of  silver  was  likely  to  extend, 
"  not  so  much  by  the  use  of  more  silver  in  the  territories  al- 
ready occupied  by  the  existing  currency  as  by  the  gradual  in- 
crease of  its  use  in  the  remoter  parts  of  India." 

When  the  report  of  the  British  Committee  had  been  con- 
sidered by  the  Indian  government,  it  published  a  response  to 
the  appeals  of  the  Bengal  Chamber  of  Commerce  and  the 
Calcutta  Trades  Association,  in  which  it  asserted  that  it  could 
not  yet  be  decisively  proved  that  the  divergence  of  the  two 
metals  was  due  wholly,  or  even  chiefly,  to  a  fall  in  the  value 
of  silver,  for  the  ruling  prices  of  commodities  and  of  the 
precious  metals  in  London  and  in  India  witnessed  to  a  con- 
siderable rise  in  the  value  of  the  yellow  metal  after  1873, 
and  especially  after  1875,  and  did  not  show  any  fall  in  the 
value  of  silver  measured  in  commodities  other  than  gold.  The 
government,  therefore,  declared  that  "  to  suspend  the  free  coin- 
age of  legal-tender  metallic  money,  as  advocated  by  the  Ben- 
gal Chamber  of  Commerce,  would  give  a  monopoly  value  to 
the  existing  stock  of  rupees  and  so  reduce  prices;  whereas 
prices  are  not  yet  risen."  The  government,  for  these  reasons, 
rejected  as  inadmissible  the  closing  of  the  mints  to  silver  with- 
out at  the  same  time  opening  them  to  the  free  coinage  of  gold, 
and  said  there  was  nothing  in  existing  conditions  to  demand  re- 
course to  a  measure  so  costly.  Such  was  the  situation  at  the 
end  of  1876. 

"With  this  general  survey  of  the  morietary  conditions  in 
Europe,  and  in  India  up  to  the  beginning  of  the  year  1877, 
we  must  now  return  to  a  consideration  of  affairs  in  the  United 
States  after  the  passage  of  the  Mint  Act  of  1873.  An  entirely 
different  order  of  events  was  taking  place  on  this  side  of  the 
water.  For  over  ten  years  the  people  had  known  no  currency 


THE  GREENBACK  PARTY  151 

but  the  paper  promises  of  the  government  to  pay,  and  no  peo- 
ple, no  matter  how  highly  civilized,  can  transact  their  business 
affairs  on  such  a  basis  for  that  length  of  time  without  injuri- 
ously affecting  their  appreciation  and  understanding  of  the 
principles  underlying  good  money. 

One  of  the  natural  outcomes  of  the  conditions  of  this  period 
in  the  United  States  was  the  appearance  of  the  Greenback 
Party.  History  seems  to  show  that  similar  movements  follow 
every  long  season  of  currency  inflation  soon  after  the  remedy 
of  contraction  is  applied  and  the  consequent  depression  in 
business  sets  in.  Possibly  it  is  more  marked  under  the  political 
conditions  of  a  liberal  form  of  government.  The  party  out  of 
power,  with  what  is  termed  "  political  sagacity,"  seizes  the 
opportunity  to  charge  the  party  in  power  with  responsibility 
for  all  the  woes  of  the  people,  and  claims  that  what  has  been 
done  will  be  undone,  and  what  has  not  been  done  will  be 
quickly  accomplished,  if  only  the  dear  people  will  turn  the 
"  incapables  "  out  of  office.  The  party  in  power,  if  it  finds 
public  opposition  developing  through  the  clamor  of  its  op- 
ponents, will  with  equal  sagacity  create  from  existing  condi- 
tions an  issue,  or  a  measure  designed  to  counteract  or  "  head 
off  "  that  which  its  opponents  have  raised.  This  unsettled 
state  of  things  furnishes  the  opportunity,  which  is  usually  em- 
braced, for  the  establishment  of  a  new  party,  going  to  radical 
extremes,  and  depending  on  the  passion  of  the  hour  to  make 
it  a  success.  Thus  the  exact  character  of  the  issues  adopted 
and  the  party  policy  created  are  often  determined,  more  with 
a  view  to  their  possibilities  as  "  vote  getters  "  than  as  solutions 
of  financial  or  industrial  problems,  though  in  the  end  the  peo- 
ple are  sure  to  find  their  true  course. 

Every  Republican  administration,  from  the  close  of  the 
war,  had  kept  in  mind  the  speedy  resumption  of  specie  pay- 
ments, and  had  used  its  best  efforts  accordingly.  With  this 
in  view,  it  had  been  the  policy  of  the  Treasury  Department  to 


152  AWAKENING  IN  THE  UNITED  STATES 

contract  the  paper  currency  as  rapidly  as  possible  without  dis- 
turbance to  business.  To  this  policy  a  large  class  began  to  at- 
tribute the  financial  panic  of  1873  and  the  ensuing  period  of 
depression,  when  the  true  cause  was  the  inevitable  collapse  that 
must  come  sooner  or  later  from  such  prolonged  currency  infla- 
tion. Thus  the  Greenback  Party  arose,  and  in  many  states 
the  Democrats,  who  had  had  no  abiding  governmental  policy 
since  the  war,  quickly  adopted  the  issue  in  the  hope,  probably, 
of  gaining  strength.  The  question  of  the  day  was  greenbacks 
or  gold  —  nothing  else,  so  far  as  money  was  concerned.  Even 
as  late  as  the  spring  of  1876,  the  party  platforms  gave  no  in- 
dications of  the  approaching  "  realization  "  of  the  silver  de- 
monetization. That  sudden  awakening  will  have  to  be  set 
down  as  one  of  the  events  that  did  not  cast  its  significant 
shadow  before.  The  financial  plank  of  the  National  Repub- 
lican convention  of  1876  spoke  only  of  the  redemption  of  the 
national  obligations  in  coin,  and  the  Democratic  platform  de- 
nounced "  the  financial  imbecility  and  immorality  of  that 
party,  which  during  eleven  years  of  peace  "  had  made  no  ad- 
vance towards  resumption,  and  it  denounced  the  resumption 
clause  of  the  act  of  1875  as  only  a  hinderance  to  resumption. 
The  Greenback  Party  denounced  both  of  the  others,  demanded 
the  immediate  repeal  of  the  resumption  act,  and  insisted  on 
the  continued  issue  of  government  notes.  None  of  these  plat- 
forms contained  a  word  about  silver,  its  relation  to  gold,  or 
its  place  in  the  currency,  although  Europe  had  been  discussing 
the  question  for  eight  years,  and  had  been  agitated  over  it  for 
three  or  four. 

History  does  not  record,  so  far  as  I  have  been  able  to  ob- 
serve, just  who  in  the  United  States  "  discovered  "  that  silver 
had  been  demonetized  in  1873.  Though  the  fact  that  the 
old  standard  silver  dollar  had  been  dropped  was  quite  gener- 
ally realized,  the  possible  seriousness  of  it  did  not,  evidently, 
suggest  itself  to  any  one  for  some  time,  for,  as  we  have  seen, 


SILVER  PRODUCERS  FOR  GOLD  IN  1874  153 

it  did  not  appear  in  the  platforms  of  1876,  and  it  was  a  year 
later  when  the  first  certificate  of  a  doubtful  character  was 
given  to  it,  still  later  when  it  really  obtained  the  political  rank 
of  a  crime.  The  bill  for  the  resumption  of  specie  payments 
brought  financial  questions  to  the  front  in  1874,  but  it  seems 
certain  that  no  one  in  Congress  then  had  any  disturbing 
thought  regarding  silver  or  its  condition  under  the  laws  — 
not  even  the  men  interested  in  silver  mines.  In  a  speech  in  the 
Senate,  April  1,  1874,  Senator  John  P.  Jones,  of  Nevada,  in 
a  strong  argument  for  resumption  of  specie  payments,  said : 

"  Does  this  Congress  mean  now  to  leave  entirely  out  of  view  and 
discard  forever  a  standard  of  value?  Did  any  country  ever  accumu- 
late wealth  and  achieve  greatness  or  attain  a  high  civilization  with- 
out such  a  standard?  And  what  but  gold  can  be  that  standard? 
What  other  thing  on  earth  possesses  the  requisite  qualities?  Gold 
is  the  articulation  of  commerce.  It  is  the  most  potent  agent  of 
civilization.  It  is  gold  that  has  lifted  the  nations  from  barbarism. 
So  exact  a  measure  is  it  of  human  effort,  that  when  it  is  exclusively 
used  as  a  money  it  teaches  the  very  habit  of  honesty.  It  neither 
deals  in  nor  tolerates  false  pretence.  It  cannot  lie.  It  keeps  its 
promises  to  rich  and  poor  Jilike." 

Does  it  seem  probable  that  in  thus  speaking  of  gold  Sena- 
tor Jones  was  referring  also  to  silver  ?  Is  it  not  clear  that  he 
used  the  word  as  it  had  been  used  for  a  generation,  considering 
gold  as  the  ideal  standard,  and  having  no  other  conception  of 
silver  coins  than  as  subsidiary  money?  Senator  Stewart  of 
the  same  state,  in  February  of  the  same  year,  said  in  the 
Senate :  "  I  want  the  standard  gold,  and  no  paper  money  not 
redeemable  in  gold ;  no  paper  money  the  value  of  which  is  not 
ascertained;  no  paper  money  that  will  organize  a  gold  board 
to  speculate  in  it."  On  another  occasion  during  the  same 
month  he  said  in  a  speech :  "  By  this  process  we  shall  come 
to  a  specie  basis,  and  when  the  laboring  man  receives  a  dollar 
it  will  have  the  purchasing  power  of  a  dollar,  and  he  will  not 
be  called  upon  to  do  what  is  impossible  for  him  or  the  pro- 
ducing classes  to  do,  figure  upon  the  exchanges,  figure  upon 
the  fluctuations,  figure  upon  the  gambling  in  ISTew  York,  but 


154  AWAKENING  IN  THE  UNITED  STATES 

he  will  know  what  his  money  is  worth.     Everybody  knows 
what  a  dollar  in  gold  is  worth." 

Could  Senator  Stewart  have  said  this  of  silver  at  that  time '{ 
In  explaining  this  utterance  in  the  Senate  nearly  twenty  years 
later,  he  said: 

"  It  was  of  no  consequence  whether  or  not  I  knew,  in  February, 

1874,  that  silver  was  demonetized  in  February,  1873.     It  was  too 
late  to  prevent  what  had  been  done  in  the  previous  year.     My  posi- 
tion at  that  time,  as  well  as  my  knowledge,  were  entirely  immaterial 
and  irrelevant  to  the  discussion.     I  did  not  know  that  silver  was  de- 
monetized for  more  than  a  year  after  1874,  since  which  time  my  bitter- 
est enemies  will  hardly  blame  me  for  not  doing  all  in  my  power  in 
and  out    of    Congress    to    remonetize    silver.  .  .  .  The  use  of  the 
term  gold  for  specie  was  inaccurate,  but  it  was  the  common  practice 
at  that  time." 

This  really  amounts  to  additional  evidence  that  at  that 
time,  as  for  twenty  years  previous,  silver  was  generally  re- 
garded as  having  a  subsidiary  place  in  the  currency  system  of 
the  country.  "  It  was  the  common  practice  at  that  time  "  to 
use  the  word  gold  for  specie.  The  statement  further  shows 
that  not  until  the  year  1876  did  Senator  Stewart  "know'' 
that  silver  had  been  demonetized.  As  he  probably  became 
conscious  of  the  fact  nearly  as  early  as  any  one,  we  are 
thus  enabled  to  fix  the  date  with  sufficient  accuracy.  It  is  diffi- 
cult to  understand  how,  in  view  of  all  the  circumstances  we 
have  enumerated,  the  absence  of  any  legal  provision  for  the 
coinage  of  a  standard  silver  dollar  could  have  escaped  atten- 
tion if  there  had  been  any  reason  in  the  mind  of  any  one  for 
deploring  the  omission.  The  resumption  act,  which  was  so  ex- 
tensively discussed  in  1874,  and  was  approved  January  14, 

1875,  plainly  implied  the  single  gold  standard.     The  second 
section  repealed  the  charge  for  converting  gold  bullion  into 
coin,  but  nothing  was  said  about  silver,  except  in  the  provision 
authorizing  the  Secretary  of  the  Treasury  to  issue  small  silver 
coins  for  the  redemption  of  fractional  paper  currency.     The 
Forty-third  Congress  adjourned  shortly  after  the  approval  of 
this  act,  and  at  some  time  between  this  and  the  assembling  of 


DEMONETIZATION  "DISCOVERED"  IN  CONGRESS  155 

the  Forty-fourth  Congress,  in  December,  1875,  it  dawned  upon 
some  one,  but  in  a  mild  way,  that  the  dollar  of  the  "  fathers," 
which,  to  be  historically  accurate,  must  be  further  defined  as 
the  dollar  which  very  few  of  the  fathers  ever  saw,  had  been 
legislated  out  of  an  existence  which,  in  practice,  it  had  never 
maintained.  It  was  during  this  year  that  the  trade  dollar, 
which,  with  the  increased  coinage  of  fractional  coins,  had  more 
than  absorbed  the  increase  in  the  silver  production  of  this 
country,  became  worth  less  than  its  face  value,  and,  as  in 
practice  it  was  found  that  in  most  Chinese  ports  the  suspicious 
merchants  received  coins  as  ingots,  according  to  their  weight 
and  fineness,  it  naturally  began  to  have  a  less  value  in  com- 
merce, and  also  a  less  value  for  the  silver  producer,  a  fact  that 
the  latter  was,  it  may  be  presumed,  not  slow  in  discovering, 
particularly  when  the  general  suspension  of  silver  coinage  in 
Europe  had  deprived  him  of  any  outlet  for  his  surplus  silver. 
In  this  situation  the  absence  of  the  right  to  take  silver  to  the 
mints  of  the  United  States  and  have  it  coined  at  the  ratio  of 
16  to  1  became  for  the  first  time  embarrassing  to  the  silver 
producer,  and  the  fact  that  silver  was  demonetized  in  1873 
was  soon  thereafter  "  discovered."  This  was  in  no  way  dis- 
creditable to  the  silver  producer.  It  was  simply  natural.  Bi- 
metallism could  not  appeal  strongly  to  him  so  long  as  the  gov- 
ernment stamped  silver  for  less  than  it  was  worth,  nor  did  it 
appeal  to  him  seriously  in  this  country  when,  owing  to  a  fur- 
ther decline,  the  mints  began  to  stamp  it  for  more  than  it  was 
worth.  It  was  not  till  his  silver  became  more  depreciated  as 
to  gold  than  was  the  government  paper  that  the  advantages 
of  bimetallism  were  strongly  revealed  to  him. 

But  the  pregnancy  of  the  "  discovery  "  did  not  at  once  im- 
press the  Congressional  mind.  There  was  nothing  to  show 
when  Congress  assembled  in  December,  1875,  that  there  had 
been  any  change  in  the  attitude  towards  silver.  Much  of  the 
report  of  the  Secretary  of  the  Treasury  was  devoted  to  a  dis- 


156  AWAKENING  IN  THE  UNITED  STATES 

cussion  of  resumption  and  the  resumption  act,  and,  in  speak- 
ing of  the  redemption  of  United  States  notes,  he  invariably 
used  the  word  gold,  whereas  the  act  speaks  of  redemption  in 
coin.  He  spoke  of  the  difficulty  of  accumulating  gold  with- 
out meeting  opposition  from  the  financial  powers,  but  no  one 
suggested  that  it  would  be  easier  to  redeem  in  silver.  Regard- 
ing this  metal  the  Secretary  said: 

"  The  diminished  use  of  silver  coin  in  various  European  countries 
and  the  increasing  production  of  our  silver  mines  would  appear  to 
render  the  present  a  very  favorable  time  for  procuring  supplies  of 
bullion  for  the  manufacture  of  silver  coin,  to  be  used  in  the  redemp- 
tion of  the  fractional  currency.  .  .  .  Since  the  passage  of  the  act, 
8,242,642  ounces  of  silver  bullion  have  been  purchased  at  an  average 
price  of  lllT4ff  cents  per  standard  ounce.  The  mints  have  been 
put  into  active  operation,  and  the  aggregate  amount  of  silver  coin 
now  in  the  treasury  is  $10,000,000." 

The  subsidiary  character  given  to  silver  by  such  declara- 
tions awakened  no  protests  apparently.  Silver  coin  could  not 
yet  circulate  extensively,  for  the  depreciation  of  the  paper 
currency  was  still  enough  greater  to  drive  silver  coins  either 
out  of  the  country  or  into  the  melting-pot.  But  early  in  1876 
the  revelation  that  there  was  no  American  legal-tender  dollar 
in  silver  burst  suddenly  upon  an  astonished  Congress.  Ap- 
parently the  appearance  of  Gabriel  would  have  been  less  a  sur- 
prise, for  the  pious  mothers  of  many  of  the  members  had 
brought  them  up  in  the  constant  expectancy  of  such  an  eA^ent ; 
but  no  prophet  had  written  in  plain  English  that  Congress 
would  discover  in  1876  what  it  accomplished  after  so  much 
discussion  in  1873. 

A  bill  had  been  introduced,  one  provision  of  which  would 
deprive  the  trade  dollar  of  its  legal-tender  function  for 
amounts  up  to  $5.  In  the  course  of  a  discussion,  Senator  Bogy, 
of  Missouri,  called  attention  to  the  fact  that,  if  the  legal-tender 
function  of  this  trade  coin  were  taken  away,  there  would  be 
no  silver  dollar  of  any  legal  tender.  Senator  Conkling,  of  ISTew 
York,  who  had  held  a  seat  in  the  Senate  when  the  act  of  1873 


EXPLANATIONS  OP  CONGRESSMEN  157 

was  passed,  in  apparent  surprise  inquired :  "  Is  it  true  that 
there  is  now  —  by  law  —  no  American  dollar?  And,  if  so, 
is  it  true  that  the  effect  of  this  bill  is  to  be  to  make  half-dollars 
and  quarter-dollars  the  only  silver  coin  which  can  be  used  as 
legal  tender?" 

Senator  Sherman  replied  that  the  use  of  the  silver  dollar 
had  been  discontinued  in  1853.  Senator  Bogy  said  that  the 
power  to  issue  them  existed  till  1873,  "  but  since  1873,  I 
think/'  he  said,  "  there  has  been  no  power."  Senator  Jones 
further  explained  that  the  privilege  was  taken  away  in  1873, 
"  but  it  needed  no  law  to  prevent  people  from  coining  such  a 
dollar  for  use  in  business,  when  there  was  another  dollar  to  be 
got  3  or  4  per  cent,  cheaper."  The  revelation  did  not  at  first 
attract  public  attention,  was  considered  of  too  little  impor- 
tance to  be  given  a  place  in  the  national  platforms  of  the  year; 
but  during  the  presidential  campaign  it  became  a  covenient 
"  object  lesson  "  in  the  arguments  of  Greenbackers,  and  when 
the  people  once  took  hold  of  the  fact  it  spread  like  wildfire. 
They  wondered  whether  it  had  been  in  any  way  responsible 
for  producing  the  panic  of  IS 73  and  the  subsequent  depres- 
sion, and  then  began  to  believe  that  it  had.  Inflationists 
classed  it  as  another  scheme  for  contraction.  Senators  and 
Congressmen,  observing  the  wave  of  popular  feeling,  hastened 
to  explain  that  they  had  no  idea  the  bill  dropped  the  silver  dol- 
lar when  they  voted  for  it.  (We  are  anticipating  a  little  here, 
for  it  should  be  understood  that  these  explanations  were  not 
made  at  once,  there  being  no  political  necessity  for  them  till 
1877.  They  were  made  mostly  in  1878,  when  the  issue  had 
become  dangerous  in  political  conventions,  and  they  are  in- 
troduced at  this  point  for  the  purpose  of  indicating  the 
mild  character  of  the  first  effects  of  the  revelation,  and  we 
may  as  well  close  here  one  of  the  most  remarkable  incidents 
in  the  political  history  of  the  country.)  William  D.  Kelley,  of 
Pennsylvania,  who,  in  the  course  of  the  long  history  of  the  bill 


158  AWAKENING  IN  THE  UNITED  STATES 

in  Congress,  had  twice  introduced  it  with  the  provision  omit- 
ting the  silver  dollar,  and  denying  the  right  of  any  other  sil- 
ver coinage  but  that  specified  in  the  act,  who  had  said 
that  his  committee  had  been  over  the  measure  line  by  line  and 
word  by  word,  and  who  ably  and  distinctly  argued  for  a  sin- 
gle standard  of  gold,  said  in  his  confession  or  explanation :  "  In 
all  the  legislation  of  this  country  there  is  no  mystery  equal  to 
the  demonetization  of  the  standard  silver  dollar  of  the  United 
States.  I  have  never  found  a  man  who  could  tell  just  how  it 
came  about,  or  why."  1 

This  was  after  the  Republicans  of  Pennsylvania  had  in 
state  convention  demanded  the  remonetization  of  silver  with 
free  coinage.  Many  other  Republicans,  including  the  most 
distinguished  men  at  Washington,  made  the  most  humble  con- 
fessions of  their  ignorance  of  the  measure  when  they  voted  for 
it,  and  the  Democrats,  who  w^ere  fully  as  responsible  for  its 
passage  as  the  Republicans,  first  confessed,  and  then  tried  to 
justify  themselves  by  calling  the  act  "  a  colossal  swindle." 
This  made  it  politically  necessary  to  find  the  swindlers.  The 
records  were  industriously  searched  for  circumstantial  evi- 
dence, and,  among  other  things,  it  was  quickly  discovered  that 
Senator  Sherman  was  in  Paris  just  previous  to  the  Monetary 
Conference  of  1867,  had  advised  Commissioner  Ruggles,  as 
has  already  been  related,  and  had  been  the  promoter  of  the 
bill  in  the  Senate.  So  Sherman  became  a  convenient  object  of 
suspicion.  It  was  also  discovered  that  the  chief  advocate  of 
the  bill  in  the  House  had  stated  in  debate  that  Ernest  Seyd,  of 
London,  had  examined  it  and  made  many  valuable  sugges- 
tions. This  was  in  time  expanded  so  that  Seyd,  who  for  years 
had  been  as  earnest  an  advocate  of  bimetallism  in  England  as 
Cernuschi  had  been  in  France  and  Laveleye  in  Belgium,  and 
who  had  by  letter  distinctly  warned  the  committee  in  charge 

1  Compare  with  Kelley's  remarks  in  1872.    See  page  120. 


FIRST  CROP  OF  SILVER  BILLS  159 

of  the  measure  against  dropping  the  dollar,  was,  by  misquota- 
tion from  the  Congressional  Record,  made  to  appear  as  being 
in  this  country  while  the  measure  was  pending  as  the  agent 
of  a  syndicate  of  foreign  bondholders,  and  with  a  big  corrup- 
tion fund  to  secure  the  adoption  of  the  gold  standard.  It  is 
unnecessary  to  enter  into  the  final  elaborations  of  this  fiction, 
made  after  Seyd's  death,  and  of  other  fictions  equally  charac- 
teristic of  the  unfortunate  career  of  the  Silver  Question  in  this 
country.  The  claims  for  the  metal  from  a  monetary  stand- 
point deserved  honest  treatment,  but  they  could  have  received 
no  worse  from  its  bitterest  enemies  than  they  suffered  through 
the  indiscretion  of  those  who  suddenly  became  its  friends  after 
the  producers  of  the  Pacific  slope,  who  for  years  had  declined 
to  take  their  product  to  the  mints  and  had  been  advocates  of 
the  gold  standard,  discovered  that,  at  the  time  when  it  would 
be  highly  convenient  and  profitable  to  have  it  coined  at  the 
mints  at  the  rate  of  $1.29  an  ounce,  it  wasn't  coined  at  all, 
except  on  government  account,  and  after  the  congressional 
constituencies  of  nearly  every  state  west  of  the  Alleghanies 
began  to  demand  what  they  called  the  traditional  double 
standard  of  the  American  people.  There  is  no  mystery  about 
the  act  of  1873  if  its  history  is  read  aright  and  from  the  be- 
ginning. With  the  facts  that  have  been  given,  further  rea- 
sons for  the  remarkable  change  in  the  opinions  of  the  legisla- 
tors of  that  time  may  be  left  to  the  psychologists. 

Returning  now  to  the  first  days  of  the  Forty-fourth  Con- 
gress, it  is  observed  that  the  discovery  of  the  demonetization  of 
silver  was  followed  by  a  large  crop  of  silver  bills.  In  March, 
Senator  Reagan,  of  Texas,  brought  in  a  measure  to  raise  the 
legal-tender  privilege  of  silver  dollars  to  $50.  In  April,  Sena- 
tor Sherman  reported  it  from  the  Finance  Committee,  amended 
?o  as  to  provide  for  coinage  of  silver  dollars  of  412.8  grains 
legal  tender  up  to  $20.  This  made  the  ratio  exactly  16  to  1, 
instead  of  15.98  to  1.  Senator  Bogy  moved  to  strike  out  the 


160  AWAKENING  IN  THE  UNITED    STATES 

amendment,  and  spoke  for  the  unlimited  legal  tender  and  coin- 
age of  both  metals  at  the  old  ratio.  He  was  followed  by  Sena- 
tor Jones,  who  meanwhile  had  been  making  an  extensive  study 
of  the  subject,  and  acquiring  a  knowledge  of  what  had  been 
going  on  for  years  in  Europe.  His  speech  was  the  real  begin- 
ning of  the  silver  discussion  in  Congress,  and  of  that  higher 
type  which  has  since  been  exceedingly  rare.  It  was  he  who 
first  suggested  in  this  country  an  international  conference  to 
secure  a  bimetallic  agreement.  But  he  evidently  did  not  ap- 
preciate the  situation  in  Europe,  probably  giving  too  much 
weight  to  the  zealous  bimetallists  and  too  little  to  the  real 
sentiments  of  the  different  governments.  He  said : 

"  It  would  be  desirable  for  all  nations  to  adopt  permanently  the 
same  standard  of  value,  and  if  the  same  were,  as  in  my  opinion  it 
no  doubt  would  be,  the  double  standar^l,  to  adopt  the  same 
relation  between  the  metals.  To  effect  this  object  all  that  is  neces- 
sary is  an  international-standard  convention,  which  can  be  called  by 
any  one  of  the  great  powers,  and  should  be  called  by  the  United 
States.  Provision  should  be  made  that  no  other  projects  but  the 
standard  and  ratio  should  be  determined  upon,  and  that  the  nations 
should  vote  according  to  population  or  wealth,  or  on  a  mixed  basis 
consisting  of  both.  For  such  an  international  convention  to  be 
called  by  the  United  States  there  is  imminent  necessity.  I  regard 
this  project  as  likely  to  lead  to  results  of  the  highest  importance. 
It  may  be  the  forerunner  of  that  federation  of  the  nations  of  which 
poets  have  dreamed  and  bards  have  sung." 

Free-coinage  amendments  were  offered  in  the  House,  and 
passed  by  a  majority  of  two  to  one.  In  July,  William  D.  Kel- 
ley,  who  had  quickly  become  a  free-silver  man,  introduced  a 
bill  for  the  unlimited  coinage  of  the  old  standard  dollar,  and 
the  restoration  of  its  legal  tender,  and  asked  for  its  immediate 
passage  under  a  suspension  of  the  rules,  but  it  failed  to  receive 
the  two-thirds  vote  necessary,  although  it  was  119  to  G6.  A 
few  days  later,  Bland,  of  Missouri,  made  another  effort  with 
a  similar  bill,  but  it  again  failed,  as  did  several  other  attempts. 
A  bill  was  passed,  however,  depriving  the  trade  dollar  of  its 
legal-tender  quality,  and  authorizing  the  Secretary  of  the 
Treasury  to  coin  silver  change  to  exchange  for  legal-tender 


THE  SILVER  COMMISSION  OF  1870  161 

notes,  which  were  to  be  reissued  only  in  exchange  for  fractional 
paper  currency,  to  be  thereupon  destroyed.  As  a  result  of 
the  discussion  and  the  failure  to  pass  any  measure  for  the  free 
coinage  of  silver,  a  resolution  was  passed  on  the  last  day  of 
the  session  providing  for  a  commission,  to  consist  of  three  sen- 
ators to  be  appointed  by  the  Senate,  three  members  of  the 
House  to  be  appointed  by  the  Speaker,  and  not  exceeding 
three  experts  to  be  selected  by  and  associated  with  them,  whose 
duty  it  should  be  to  inquire : 

"  (1)  Into  the  change  which  has  taken  place  in  the  relative  value 
of  gold  and  silver  ;  the  causes  thereof,  whether  permanent  or  other- 
wise ;  the  effects  thereof  upon  trade,  commerce,  finance,  and  the  pro- 
ductive interests  of  the  country  and  upon  the  standard  of  value  in 
this  and  foreign  countries. 

"  (2)  Into  the  policy  of  the  restoration  of  the  double  standard  in 
this  country  ;  and.  if  restored,  Avhat  the  legal  relation  between  the 
two  coins  should  be. 

"  (3)  Into  the  policy  of  continuing  legal-tender  notes  concurrently 
with  'the  metallic  standards,  and  the  effect  thereof  upon  the  labor, 
industries,  and  wealth  of  the  country  ;  and 

"(4)  Into  the  best  means  for  providing  for  facilitating  the  re- 
sumption of  specie  payments." 

The  further  this  event  recedes  into  the  past,  and  the  less, 
therefore,  we  can  appreciate  the  conditions  then  prevailing, 
the  more  unique  will  it  appear  as  a  feature  of  monetary  his- 
tory. Here  was  the  legislature  of  a  great  nation,  which,  for 
various  reasons,  had  had  but  little  metallic  currency  for  forty 
years,  and  wrhich  had  been  compelled  to  refuse  specie  pay- 
ments for  fifteen  years,  which  from  1835  to  1873  had  scarcely 
seen  a  standard  silver  dollar  of  its  own  mintage,  and  which,  in 
the  two  years  following  the  demonetization  of  silver  by  law  in 
1873,  had  coined  more  silver  dollars  than  had  been  coined  for 
eighty  years  before  1873,  solemnly  inquiring  into  the  effects 
upon  its  trade,  commerce,  and  productive  interests  of  a  change 
in  the  relative  value  of  silver  to  gold,  into  the  policy  of  restor- 
ing that  which  in  practice  had  not  existed  for  years,  and  at 
a  time  when  all  the  other  great  nations  of  the  earth  were  dis- 
carding it.  England,  with  her  gold  standard,  had  in  circulation, 
11 


162  AWAKENING  IN  THE  UNITED  STATES 

probably,  ten  times  more  silver  than  could  be  found  in  all 
the  old  stockings  of  the  American  people  at  that  time,  to  say 
nothing  of  the  enormous  silver  currency  of  her  colonies.  Eng- 
land had  reason  to  be  concerned  over  the  change  in  the  rela- 
tive value  of  the  two  metals,  and  so  had  Germany,  with  over  a 
hundred  million  dollars'  worth  of  old  thalers  of  full  legal  ten- 
der, and  so  had  France,  with  the  largest  stock  of  legal-tender 
silver  in  the  world,  outside  of  India.  But  the  United  States  had 
not  even  a  circulation  of  fractional  silver,  and  dared  not  put 
it  out  unless  paper  was  surrendered  for  it.  The  first  practical 
question  in  this  country  was  resumption;  so  far  as  a  change  in 
the  relative  value  of  gold  and  silver  bore  on  that  subject,  an  in- 
quiry was  practical.  The  usefulness  of  the  commission  de- 
pended on  the  light  it  should  furnish  for  the  determination 
of  the  policy  of  the  future,  in  anticipation  of  the  resumption 
of  specie  payments,  and  not  upon  the  trade  and  commerce  of 
the  past,  under  an  irredeemable  paper  regime.  Had  not  steps 
for  resumption  been  already  taken,  and  the  future  course 
definitely  marked  out,  the  work  of  the  commission  would  have 
had  simply  theoretical  value;  but  under  the  circumstances  it 
proved  of  great  practicability,  and  the  report  proved  to  be 
one  of  the  most  valuable  compendiums  of  monetary  facts  that 
had  been  published  up  to  that  time. 

The  commission,  as  appointed,  consisted  of  Senators  Jones 
of  Nevada,  Bogy  of  Missouri,  and  Boutwell  of  Massachusetts, 
Congressmen  Gibson  of  Louisiana,  Willard  of  Michigan,  and 
Bland  of  Missouri,  and,  for  experts,  William  S.  Groesbeck  of 
Ohio,  and  Prof.  Francis  Bowen  of  Harvard  University.  It  did 
its  work  thoroughly  and  collected  vast  stores  of  information 
from  the  best  sources  in  this  country  and  in  Europe.  Briefly 
stated,  the  conclusions  of  the  majority,  according  to  the  report, 
which,  it  has  been  asserted,  was  written  by  Senator  Jones,  were 
that  the  production  of  silver  relatively  to  gold  had  not  been 
greater  than  formerly,  that  the  fall  in  the  price  had  not  been 


THE  MAJORITY  REPORT  163 

caused  by  any  large  production,  but  mainly  by  concurrent  de- 
monetization of  silver  in  Germany,  the  United  States,  and  the 
Scandinavian  states,  the  closure  of  the  mints  of  Europe  to  its 
coinage,  the  temporary  diminution  of  the  Asiatic  demand,  the 
exaggeration  of  the  actual  and  prospective  yield  in  the  Nevada 
silver  mines,  and  a  prevailing  idea  that  the  efforts  of  the  hold- 
ers of  government  securities  would  bring  about  its  demoneti- 
zation; that  gold  is  more  fitful  in  production  than  silver;  that 
the  average  production  of  both  is  more  steady  than  that  of 
either  one ;  that,  to  annihilate  the  money  function  of  one  must 
greatly  increase  the  purchasing  power  of  the  other  and  greatly 
reduce  prices ;  that  silver  to  the  amount  of  three  billion  dollars 
in  coin,  the  accumulation  of  fifty  centuries,  was  so  worked 
into  the  web  and  woof  of  the  world's  commerce  that  it  could 
not  be  discarded  without  entailing  the  most  serious  conse- 
quences, social,  industrial,  political,  and  commercial;  that  the 
evil  was  enormously  aggravated  by  the  selection  of  gold  as  the 
metal  to  be  retained,  and  silver  as  the  metal  to  be  rejected; 
that  the  exchanges  of  the  world  and  especially  of  this  country 
were  continually  and  largely  increasing,  while  the  supplies  of 
both  the  precious  metals  taken  together,  if  not  diminishing, 
were  at  least  stationary,  and  the  supply  of  gold  taken  by  itself 
was  falling  off;  and  that  to  submit  the  vast  and  increasing  ex- 
changes of  this  country  and  of  the  world  to  be  measured  by  a 
metal  never  to  be  depended  upon  in  its  supply,  and  then  ac- 
tually diminishing,  would  make  crisis  chronic  and  business 
paralysis  perpetual.  The  majority  also  recommended  the 
restoration  of  the  double  standard,  and  the  unrestricted  coin- 
age of  both  metals,  as  not  simply  the  best,  but  the  essential 
means  for  the  resumption  of  specie  payments.  In  its  opinion, 
moreover,  the  remonetization  of  silver  in  this  country  would 
have  a  powerful  influence  in  preventing,  and  probably  would 
prevent,  the  demonetization  of  silver  in  France  and  other 
European  countries,  and,  even  without  change  in  legislation 


164  AWAKENING  IN  THE  UNITED  STATES 

abroad,  would  draw  to  this  country  silver  from  other  countries, 
while  cheap,  in  exchange  for  exports,  so  that  this  country 
would  have  the  benefit  in  the  rise  in  value  which,  it  was  be- 
lieved, would  take  place  when  the  temporary  causes  of  its  de- 
pression had  passed.  The  facts  that  Germany  and  the  Scandi- 
navian states  had  adopted  the  gold  standard,  and  that  some 
other  European  nations  might  possibly  adopt  it,  instead  of 
being  reasons  for  perseverance  in  the  attempt  to  establish  it 
in  the  United  States,  were  precisely  the  facts,  the  majority 
held,  which  made  such  an  attempt  entirely  impracticable  and 
ruinous,  for  the  attainment  of  such  a  standard  became  difficult 
precisely  in  proportion  to  the  number  and  importance  of  the 
countries  engaged  in  striving  for  it;  and  in  precisely  the  same 
proportion  would  the  ruinous  effects  of  striving  after  it  be 
aggravated.  "  To  propose,"  said  this  majority,  "  to  this  coun- 
try a  contest  for  the  gold  standard  with  the  European  nations 
is  to  propose  to  it  a  disastrous  race,  in  reducing  the  price  of 
commodities  and  of  labor,  in  aggravating  the  burdens  of  debt, 
and  in  the  diminution  and  concentration  of  wealth  in  which 
all  the  contestants  would  suffer  immeasurably  and  the  victors 
even  more  than  the  vanquished."  Such  were  the  conclusions 
of  Senators  Jones  and  Bogy  and  of  Congressmen  Willard  and 
Bland,  and  of  Groesbeck,  the  expert.  Senator  Boutwell  made 
a  minority  report  against  the  remonetization  of  silver  except 
upon  a  previously  agreed  basis,  adopted  in  conjunction  with 
European  nations,  and  he  considered  it  expedient  to  extend  an 
invitation  to  the  commercial  nations  of  the  world  to  join  in 
a  convention  for  the  purpose  of  considering  the  wisdom  of 
providing  by  treaties  concurrent  legislation  for  the  use  of  both 
silver  and  gold  upon  a  fixed  relative  valuation.  He  maintained 
the  uselessness  of  inquiring  into  the  causes  of  the  variations  of 
the  two  metals  when,  so  long  as  gold  was  generally  accepted 
as  the  standard  of  value  even  in  countries  where  silver  was 
endowed  with  the  legal-tender  quality,  the  relation  which 


SENATOR  BOUT  WELL  DISSENTS  163 

other  articles,  including  silver,  bear  to  gold  was  one  of  fact, 
and  all  theories  regarding  values  must  conform  to  it;  that 
human  experience  had  shown  that  no  country  had  been  able 
to  maintain  two  standards  of  value  in  actual  use  at  the  same 
time;  that  if  the  United  States  remonetized.  silver  without  re- 
gard to  the  policy  of  other  countries,  the  discarded  silver  of 
those  countries  would  flow  to  this  country,  and  it  would  stead- 
ily decrease  in  value ;  that  it  would  not  be  useful  in  the  redemp- 
tion of  our  paper  currency,  as  it  would  not  answer  for  the 
purpose  of  liquidating  foreign  balances;  that  the  adoption  of 
silver  as  a  standard  would  be  followed  by  a  loss  in  the  depre- 
ciation of  the  public  credit  far  greater  than  any  gain  to  the 
government  by  the  payment  of  the  interest  and  principal  of 
the  public  debt  in  a  coin  less  valuable  than  gold;  that,  however, 
it  would  be  wise  if  the  nations  could  agree  to  the  use  of  both 
gold  and  silver  as  a  standard,  as  the  annual  product  of  the  two 
metals  combined  appeared  to  be  more  uniform  than  the  an- 
nual product  of  either,  justifying  the  conclusion  that  together 
they  would  furnish  a  more  unvarying  basis  for  business  than 
either  one,  render  the  transaction  of  business  more  safe, 
diminish  the  danger  of  revulsions  and  the  suspension  of  specie 
payments;  but  that  the  remonetization  of  the  white  metal  by 
the  United  States  alone  would  be  followed  by  such  a  depre- 
ciation in  its  value  as  to  furnish  a  reason  against  the  adoption 
of  the  plan  by  the  rest  of  the  world. 

Prof.  Eowen,  the  other  expert,  also  wrote  a  lengthy  dis- 
senting report,  which  was  concurred  in  by  Congressman  Gib- 
son. Very  briefly  stated,  his  conclusions  were : 

1.  The  great  changes  that  have  taken  place  during  the  last  year  *• 
in  the  relative  value  of  the  two  precious  metals  are  attributable 
almost  entirely  to  fluctuations  in  the  market  price  of  silver. 

2.  These  fluctuations  prove  that  silver  has  become  entirely  unfit 
for  use  as  a  standard  of  value. 

3.  The  so-called  double  standard  is  an  illusion  and  an  impossi- 
bility. 

4.  The  proper  place  for  silver  in  a  monetary  system  is  that  of  a 


166  AWAKENING  IN  THE  UNITED  STATES 

subsidiary  or  token  currency  which  is  considerably  overvalued  by 
law  and  made  legal  tender  only  within  certain  limits. 

From  this  point  of  view  and  for  the  purpose  of  facilitating 
the  resumption  of  specie  payments,  and  also  of  promoting  the 
internationally  of  gold  coinage,  Prof.  Bowen  advocated  the 
following  legislative  measures: 

"  The  coinage  of  dollars,  each  containing  345.G  grains  of  pure 
silver,  to  be  legal  tender  for  any  sum  not  exceeding  $20,  and  to  be  is- 
sued only  in  exchange  for  paper  currency  below  the  denomination  of 
five  dollars,  the  one-dollar  and  two-dollar  notes  so  received  to  be  im- 
mediately cancelled  and  destroyed.  These  silver  dollars,  however, 
should  be  receivable  to  any  amount  in  payment  of  any  dues  to  the 
government,  except  for  duties  on  imports. 

"  Gold  should,  in  future,  be  coined  only  at  the  rate  of  22.6  grains 
of  pure  gold  to  the  dollar,  so  that  the  half-eagle  or  five-dollar  piece 
may  be  almost  the  exact  equivalent  of  one  pound  sterling,  but  with 
the  provision  that  all  debts  and  contracts  expressly  made  payable 
in  gold,  and  outstanding  on  the  date  of  such  an  enactment,  should  be 
paid  and  discharged  only  by  dollars  each  containing  23.2  grains  of 
pure  gold,  or  by  their  equivalent. 

"  Out  of  the  paper  currency  received  by  the  government  in  the  col- 
lection of  its  internal  revenue,  a  sum  not  exceeding  three  millions  of 
dollars  each  month  should  not  be  reissued,  but  cancelled  and  de- 
stroyed, any  deficit  thereby  created  in  the  Treasury  being  supplied 
by  the  sale  of  any  of  the  bonds  already  authorized  by  law." 

In  a  supplementary  note  to  the  report,  Senators  Jones  and 
Bogy  and  Congressman  AVillard  strongly  urged  that  when 
silver  was  remonetized  in  the  United  States  it  should  be  at 
the  ratio  of  15.50  to  1,  and,  to  accomplish  this,  that  the  weight 
of  the  silver  dollar  be  reduced  to  399.9  grains.  In  his  testi- 
mony before  the  commission,  Cermischi,  the  French  bimetal- 
list,  had  declared  that  it  would  be  better  for  the  United  States 
not  to  remonetize  silver  at  all  than  at  the  old  ratio  of  16  to  1, 
and  these  three  commissioners  in  their  report  said  that  a  legis- 
lative remonetization  of  silver  at  the  ratio  of  15.50  to  1  would 
accomplish  without  delay  all  the  objects  of  the  proposition  for 
an  international  conference,  for,  if  such  a  conference  resulted 
in  anything,  it  would  be  in  the  agreement  of  the  United  States 
to  adopt  the  European  ratio,  as  it  was  not  expected  that 
Europe  could  be  persuaded  by  any  conference  to  give  up  that 
ratio  and  adopt  the  old  American  one.  But  Grocsbeck  and 


QROESBECK  AND  BLAND  OPPOSE  THE  FRENCH  RATIO  167 

Bland  could  not  agree  with  their  associates  in  this  view.  The 
former  took  the  ground  that,  if  it  did  result  in  the  exportation 
of  silver,  it  would  bring  back  gold  or  merchandise,  and,  in  view 
of  the  fall  of  silver,  he  felt  sure  that,  if  the  United  States  and 
the  leading  nations  of  Europe,  including  the  Latin  Union, 
were  then  assembled  in  a  conference  to  consider  the  subject, 
they  would,  in  view  of  the  prevailing  market  value  of  the  two 
metals,  prefer  16  to  1  as  being  more  accurate  and  just.  Bland 
adhered  to  the  old  dollar  in  a  note  containing  this  remarkable 
observation :  "  I  fear  we  should  endanger  the  success  of  the 
movement  to  remonetize  silver  in  this  country  should  we  now 
attempt  to  change  the  relation  existing  when  so  many  of  our 
debts,  public  and  private,  were  contracted ;  for  whatever  silver 
dollar  we  authorize  should  in  all  respects  in  law  be  equal  to  the 
gold  dollar  in  the  discharge  of  all  debts,  public  and  private, 
past  and  future." 

As  most  of  the  existing  debts  had  been  contracted  when 
the  United  States  had  neither  silver  nor  gold,  it  made  little 
difference  whether  the  ratio  was  slightly  changed  or  not.  Mr. 
Bland  was  evidently  laboring  under  the  delusion,  which  after- 
wards became  so  widespread,  that  we  had  had  a  perfect  and  un- 
variable  double  standard  up  to  1873,  whereas  there  had  been 
very  few  days  in  the  entire  history  of  the  government  when 
gold  and  silver  dollars  were  of  equal  value  at  prevailing  ratios, 
and  it  is  doubtful  if  there  ever  was  a  time  when  values  were 
actually  measured  in  terms  of  silver  and  gold  together.  It  will 
be  observed  from  this  analysis  of  the  reports  that  four  of  the 
commission  were  in  favor  of  the  remonetization  of  silver,  and 
three  were  opposed,  while  only  two  favored  the  restoration  of 
the  old  dollar. 

The  Forty-fourth  Congress  met  for  its  closing  session  De- 
cember 4,  1876,  and  although  the  commission  was  unready  to 
report,  Bland  at  once  reported  from  the  Committee  on  Mines 
and  Mining  a  substitute  for  his  original  bill  (which  had  pro- 


168  AWAKENING  IN  THE  UNITED  STATES 

vided  for  the  unlimited  issue  of  coin  notes  based  on  gold  and 
silver  bullion  brought  to  the  mints),  providing  for  the  unre- 
stricted coinage  of  silver  dollars  of  the  old  weight,  and  for 
their  full  legal  tender.  The  following  day,  the  13th,  the  pre- 
vious question  was  ordered  on  the  substitute,  all  amendments 
were  prevented,  and  after  a  debate  limited  to  two  hours  it 
was  passed  by  a  vote  of  167  to  53.  The  Senate  referred  it  to 
the  Finance  Committee,  and  soon  afterward,  the  Silver  Com- 
mission asked  for  an  extension  of  time  for  making  its  report, 
which  was  granted.  The  Finance  Committee  at  once  directed 
its  chairman  to  report  the  Bland  Bill  back  without  recom- 
mendation, to  be  placed  on  the  calendar,  awaiting  the  report 
of  the  commission  before  taking  the  measure  up  for  action. 
The  main  part  of  the  commission's  report  was  submitted  on 
March  2,  and  two  days  later  that  Congress  adjourned,  Mr. 
Hayes  becoming  President. 

The  silver  question  was  fairly  launched,  and  made  its 
appearance  in  the  political  conventions  of  that  year  for  the  first 
time.  The  Democrats  quite  generally  adopted  the  issue,  and, 
conscious  of  the  apparent  strength  of  the  Greenback  Party, 
thought  to  embrace  that  element  by  declaring  for  the  unlim- 
ited issue  of  notes  also.  One  would  think  from  reading  some 
of  the  Democratic  platforms  of  1877  that  a  large  portion  of 
the  people  were  convinced  that  their  happiness  depended  upon 
the  government  working  its  mints  and  printing-presses  day 
and  night.  The  Republicans  in  many  sections  earnestly 
adopted  the  free-silver  issue.  They  were  more  or  less  tainted 
with  inflation  in  the  West,  and  the  leaders  felt  compelled  to  do 
something.  Indeed,  the  arguments  of  the  Silver  Commission 
appealed  to  many  thoughtful  persons,  to  whom,  undoubtedly, 
the  restoration  of  the  double  standard  by  the  United  States 
alone  seemed  a  wise  economic  step.  The  perceptions  of  the 
people  had  been  blunted  by  the  use  of  a  paper  currency,  and, 
while  desiring  the  resumption  of  specie  payments,  they  could 


POLITICAL  PLATFORMS  OF  1877  169 

not  fail  to  regard  silver  coin,  which  had  intrinsic  value,  as  bet- 
ter than  depreciated  paper.  Silver  had  not  yet  fallen  irre- 
deemably, and  in  that  year  was  showing  an  upward  tendency 
owing  to  the  famine  in  India.  Hence,  in  1877,  we  find  the  Re- 
publicans of  Iowa  making  such  platform  declarations  at  this: 

"  The  silver  dollar  having  been  the  legal  unit  since  the  foundation 
of  the  federal  government  until  1873,  the  law  under  which  its  coinage 
was  suspended  should  be  repealed  at  the  earliest  possible  day,  and 
silver  made  with  gold  a  legal  tender  for  the  payment  of  all  debts, 
both  public  and  private." 

The  Ohio  Republicans  declared: 

"  We  are  in  favor  of  both  silver  and  gold  as  money;  that  both  shall 
be  legal  tender  for  the  payment  of  all  debts,  except  those  specifically 
provided  for  by  law,  with  coinage  and  valuations  so  regulated  that 
our  people  shall  not  be  placed  at  a  disadvantage  in  our  trade  with 
foreign  nations,  and  that  both  metals  shall  be  kept  in  circulation  as 
the  money  of  the  nation,  as  contemplated  by  the  Constitution;  and 
we  therefore  demand  the  remonetization  of  silver.": 

The  Pennsylvania  Republicans  expressed  their  position  in 
this  language: 

"  The  long  and  successful  existence,  under  the  laws  of  Congress, 
of  the  double  coin  standard  warrants  us  in  demanding  an  early  repeal 
of  the  legislation  which  demonetized  silver  and  established  an  almost 
exclusive  gold  standard,  and  we  therefore  favor  a  return  to  the 
free  use  and  unrestricted  coinage  of  the  dollar  of  1798,  and  its  res- 
toration to  the  position  it  held  as  a  legal  tender  during  the  eighty 
years  of  our  national  existence,  thus  preserving  the  equality  of  the 
commercial  value  of  the  silver  dollar  with  the  gold  dollar,  keeping 
both  in  circulation." 

After  such  a  statement  as  this  we  need  not  be  surprised 
at  the  narrow  limits  of  the  popular  understanding  of  the  mone- 
tary experience  of  the  nation  prevailing  in  that  period  of  de- 
preciated paper.  The  common  thing  in  the  Democratic  plat- 
forms of  that  year  was  the  denunciation  of  the  demonetization 
of  silver  as  a  "  Republican  outrage,"  and  a  demand  for  the 
retention  of  the  greenbacks. 


i  In  the  recent  campaign  (1890)  for  the  nomination  of  a  Republican 
candidate  for  the  Presidency,  bitter  criticisms  were  made  of  Major 
McKinley  by  some  Democratic  papers  (afterwards  compelled  to  sup- 
port him)  because  he  voted  in  1877  for  a  free-silver  coinage  bill  in 
the  House.  He  was  first  elected  to  Congress  in  the  campaign  for 
which  this  platform  was  made. 


170  AWAKENING  IN  THE  UNITED  STATES 

With  the  responsibility  for  the  resumption  of  specie  pay- 
ments within  a  specified  time  resting  on  the  shoulders  of  the 
executive  department  of  the  government,  it  naturally  regarded 
with  much  concern  the  growing  movement  for  the  restoration 
of  silver  while  European  nations  were  discarding  it.  In  his 
last  message  to  the  Forty-fourth  Congress,  Lot  M.  Morrill, 
Secretary  of  the  Treasury,  had  argued  skilfully  that  the  coin 
payment  to  which  the  faith  of  the  nation  was  pledged  in  18G9 
was  gold,  and  not  silver,  and  that  any  other  view  of  it,  what- 
ever technical  construction  the  language  of  that  act  might  be 
susceptible  of,  would  be  regarded  as  of  doubtful  good  faith 
and  its  probable  effect  prejudicial  to  the  public  credit.  He  es- 
timated that  the  belief  that  the  public  obligations  were  to  be 
paid  in  gold  coin  had  a  practicable  value  in  the  probable  re- 
duction of  the  debt  equal  to  one-fourth  of  the  amount  of  the 
annual  interest  thereon. 

In  assuming  his  duties  as  Secretary  of  the  Treasury  in 
March,  1877,  and  thus  entering  upon  the  critical  period 
preparatory  to  resumption,  John  Sherman  found  a  contract 
made  by  his  predecessor,  Mr.  Morrill,  with  August  Belmont  & 
Co.,  representing  N.  M.  Rothschild  &  Sons  and  associates  in 
London,  J.  &  W.  Seligman  &  Co.,  in  behalf  of  themselves 
and  associates  in  New  York,  Drexel,  Morgan  &  Co.,  represent- 
ing J.  S.  Morgan  &  Co.,  of  London,  and  Morton,  Bliss  &  Co., 
representing  a  New  York  syndicate,  for  purchasing  bonds  for 
the  refunding  of  the  outstanding  6-per-cent.  five-twenties,  the 
Treasury  Department  making  regular  calls  for  them  for  re- 
demption. These  houses  had  agreed  to  take — and  had  taken— 
to  the  extent  of  $40,000,000,  the  44-per-cents.  authorized  by 
the  acts  of  1870  and  1871,  while  holding  the  exclusive  right  to 
subscribe  for  all  or  any  portion  of  the  remaining  $260,000,000. 
The  act  also  enabled  the  Secretary  of  the  Treasury  to  with- 
draw the  4|-per-cents.  from  the  market,  and  substitute  thirty- 
year  4-per-cents.  In  April,  Secretary  Sherman  wrote  to  the 


DOUBT  AS  TO  REFUNDING  BONDS  171 

contractors  that  he  desired  to  do  this  when  $200,000,000  of 
the  4^-per-cents.  had  been  sold.  By  the  words  of  the  act  all 
such  bonds  were  "  redeemable  in  coin  of  the  present  standard 
value;"  and,  as  the  act  was  passed  in  1870,  or  before  silver 
was  demonetized  by  law,  the  silver  men  held  that  all  bonds 
could  be  paid  in  either  gold  or  silver.  The  contractors  for  the 
purchase  of  the  new  securities  were  not  slow  in  asking  Secre- 
tary Sherman  what,  in  his  opinion,  the  terms  of  the  act  meant, 
and  if  it  would  not  be  better  to  avoid  any  misunderstanding  by 
making  the  bonds  payable  in  gold.  The  Secretary  at  once 
replied  that  the  new  bonds  would  have  to  conform  to  the  terms 
of  the  law,  u  payable  in  coin ;  but,"  he  added,  "  they  will  be 
of  the  present  date,  when  only  one  kind  of  coin  is  a  legal  ten- 
der for  all  debts."  This  meant,  of  course,  that  bonds  were 
payable  in  the  standard  coin  at  the  time  of  their  issue,  and  not 
at  the  time  of  the  passage  of  the  act.  But  upon  a  closer  exam- 
ination of  the  act  it  was  found  that  it  also  specifically  said  "  in 
coin  of  the  standard  value  of  the  United  States  on  said  July  14, 
1870."  Other  expressions  in  the  act,  could,  however,  be  con- 
strued differently.  Whatever  the  fact  was  in  law,  in  practice 
it  was  that  at  the  time  of  the  enactment  it  was  next  to  impossi- 
ble to  find  an  American  silver  dollar,  and  the  Director  of  the 
Mint  estimated  that  not  one  hundred  of  them  were  in  exist- 
ence even  in  1876.  There  is  no  doubt  whatever  that  the 
words  "  standard  value  "  used  in  the  act  were  understood  at 
that  time  to  mean  nothing  else  than  the  amount  of  pure  gold 
found  in  coin  as  fixed  in  1837.  Secretary  Sherman  applied 
to  the  Attorney-General  for  a  ruling,  and  the  latter  replied 
that  the  meaning  obviously  was  "  coin  of  the  standard  value 
at  the  date  of  the  passage  of  the  act."  The  inference,  there- 
fore, was  that  the  bonds  could  be  redeemed  in  silver,  but  he 
also  said  that  the  provision  was  intended  to  guard  the  holder 
against  any  depreciation  that  might  take  place  in  the  coin 
while  the  government  would  not  be  compelled  to  pay  the  ad- 


172  AWAKENING  IN  THE  UNITED  STATES 

ditional  value  should  the  coinage  be  appreciated.  This  might 
be  made  to  mean  that  the  bonds  could  not  be  redeemed  in  sil- 
ver coin  depreciated  far  below  the  value  it  had  at  the  date  of 
the  act,  or  it  might  mean  in  silver  coined  at  a  ratio  to  gold 
unlike  that  prevailing  by  law  in  1870.  The  uncertainty,  there- 
fore, was  hardly  removed  and  the  character  of  the  redemption 
was  really  left  dependent  on  the  good  faith  of  the  government. 
The  hesitancy  of  the  investors  was  not  removed.  In  June,  As- 
sistant Secretary  French,  of  the  Treasury  Department,  sub- 
mitted to  the  Secretary  an  opinion  that,  if  the  coinage  laws  had 
remained  unchanged,  bonds  could  have  been  redeemed  in 
either  gold  or  silver,  but  the  act  of  1873  had  practically  de- 
clared that  silver  should  not  be  a  tender  for  such  bonds.  All 
bonds  sold  after  1873,  he  said,  carried  with  them  the  promise 
to  pay  in  legal  coin  —  that  is,  gold  coin  —  and  an  act  then  to 
make  them  payable  in  silver  also  would  insert  an  element  not 
in  the  contract.  He  maintained,  therefore,  that  all  bonds 
sold  by  contract  to  the  syndicate  must  be  paid  in  gold. 

At  this  time  some  leading  Republican  newspapers  were 
claiming  or  representing  that  the  President  and  Secretary 
Sherman  were  favorable  to  silver  legislation,  a  circumstance 
about  which  the  Secretary  complained  privately  to  J.  &  W. 
Seligman  &  Co.,  who  had  called  his  attention  to  an  editorial 
in  the  New  York  Times,  regarding  the  effect  of  the  silver 
movement  on  the  sale  of  the  bonds,  and  suggested  that  while 
intelligent  men  knew  that  the  Secretary  and  the  President 
were  "  sound  on  the  silver  question,"  it  would  be,  they  thought, 
"  highly  advantageous  to  the  marketing  of  the  4-per-cent. 
bonds  to  disabuse  those  who  had  been  led  to  believe  that 
the  President  and  Secretary  favored  remonetizing  silver  with 
a  view  of  paying  the  national  debt  in  a  metal  so  fluctuating  as 
silver  had  become  since  the  principal  nations  of  Europe  had 
demonetized."  l  About  the  same  time  August  Belmont  wrote 

i  Seligman  &  Co.  to  Mr.  Sherman,  June  12,  1877. 


SECRETARY  SHERMAN'S  DIFFICULT  POSITION  173 

to  the  Secretary  a  long  letter  earnestly  urging  him  to  make 
an  official  expression  over  his  own  signature.  "  You  are 
placed  at  this  moment,"  he  wrote,  "  by  a  large  portion  of  your 
political  friends,  in  a  somewhat  similar  position  as  the  late  Mr. 
Chase  was  by  the  attempt  of  Thaddeus  Stevens  to  have  Con- 
gress pass  a  law  to  declare  the  principal  of  the  five-twenty 
bonds  payable  in  currency.  Mr.  Chase  took  the  bull  by  the 
horns  by  declaring  over  his  own  signature  that  the  principal,  as 
well  as  interest,  of  the  five-twenty  bonds  were  payable  in  gold." 
Belmont  called  the  "  silver  heresy  worse  than  the  inflation  her- 
esy." "  The  latter,"  he  said,  "  only  proposes  to  put  off  the  day 
of  payment,  while  the  first  actually  proposes  to  pay  at  a  dis- 
count of  14  per  cent,  what  the  government  is  now  borrow- 
ing (at  4  per  cent.)  at  par."  I 

Secretary  Sherman  was  unquestionably  in  a  difficult  posi- 
tion. The  resumption  of  specie  payments,  the  burden  of  which 
rested  upon  the  administration,  and  largely  upon  his  shoulders, 
was  not  to  be  easily  accomplished,  even  imder  favorable  con- 
ditions. It  depended  upon  the  assured  credit  of  the  govern- 
ment, and  those  to  whom  he  looked  for  the  marketing  of  the 
bonds  doubted  that  credit  unless  redemption  in  gold  was 
stipulated  over  his  signature,  while  Congress,  including,  ap- 
parently, a  majority  of  the  members  of  his  own  party,  was 
preparing  to  remone.tize  silver.  Moreover,  the  Secretary  was 
an  executive  officer,  appointed  to  carry  out  the  acts  of  Con- 
gress, and  he  hesitated  to  give  occasion  for  any  resentment  of 
a  body  jealous  of  its  prerogatives,  or  to  give  possible  material 
to  the  silver  advocates  for  argument  or  play  upon  popular 
passions.  Yet  the  bonds  must  be  sold.  The  people  who 
could  buy  them  asked  to  be  assured  of  their  payment  in  gold, 
and  the  people  who  couldn't  buy  them  demanded  that  the  gov- 
ernment pay  its  obligations  in  silver,  if  it  wished  to.  To  com- 

i  Belmont  to  Sherman,  June  14,  1877. 


174  AWAKENING  IN  THE  UNITED  STATES 

plicate  matters,  at  just  this  time  the  foreign  market  was  dis- 
turbed by  the  Russo-Turkish  war  and  the  threatened  revival 
of  the  Eastern  Question,  and  at  home  a  strike  on  the  Balti- 
more &  Ohio  Railway  system  was  resulting  in  violence  and 
destruction. 

Two  days  after  the  receipt  of  Belmont's  letter  the  Secre- 
tary replied  that  he  had  given  the  suggestion  careful  con- 
sideration, and  had  come  to  the  firm  conclusion  that  it  would 
be  inexpedient  on  his  part  to  make  any  public  statement,  which 
would  be  calculated  to  defeat  the  very  object  Belmont  had  in 
view.  "  As  a  purely  executive  officer,"  he  wrote,  "  I  have  no 
power  to  pass  upon  the  question  mooted.  My  attempt  to  do  so 
would  at  once  unite  all  those  who  are  seized  with  this  mania 
and  those  who  oppose  executive  encroachment  upon  legisla- 
tive power.  It  would  create  excitement,  personal  and  political 
animosities  would  mingle  with  it,  and  it  would  tend  more 
than  anything  else  to  defeat  the  success  of  the  loan.  I  am 
quite  sure  this  would  be  the  result.  As  to  whether  Congress 
or  the  people  would  ever  undertake  to  pay  either  principal  or 
interest  of  the  bonded  debt,  and  especially  the  bonds  sold 
since  1873,  in  silver,  I  have  a  firm  conviction  that  the  ques- 
tion will  never  seriously  be  raised.  These  bonds  will  be 
paid,  principal  and  interest,  in  gold  coin.  The  people 
of  the  United  States  have  always  been  extremely  sensitive  as 
to  the  public  credit.  They  never  have  for  the  sake  of  an  ap- 
parent profit  yielded  any  question  involving  the  public  honor. 
.  .  .  Parties  or  factions  may  for  a  time  raise  and  contest 
questions,  but  they  are  but  bubbles,  and  will  pass  away,  and, 
like  all  questions  involving  public  credit,  will  be  rightfully 
settled  in  due  time  by  Congress  and  the  people.  jSTothing 
would  so  tend  to  disturb  this  result  as  unauthorized  '  theses ' 
or  dogmas  by  an  executive  officer  upon  a  question  purely  legis- 
lative or  judicial.  Indeed,  it  may  be  that  too  much  has  al- 
readv  been  said  about  this  matter  by  both  the  President 


APPREHENSIONS  ABROAD  175 

and  myself,  and  I  assure  you  that  you  will  have  no  occasion 
tc  be  disturbed  by  anything  truthfully  reported  by  either  of 
us  hereafter.  The  better  way  is  to  move  right  along,  making 
your  own  statements,  and,  if  at  any  time  I  see  a  proper  occa- 
sion for  a  strong  expression  of  my  opinion,  I  will  give  it." 

The  same  day  that  the  Secretary  penned  this  the  London 
agent  of  the  Treasury  Department  wrote  to  him  that  English 
investors  were  hesitating  about  taking  the  bonds  because  of  the 
rumors  that  the  President  and  Secretary  of  State  (Mr.  Evarts) 
were  both  in  favor  of  the  restoration  and  unlimited  coinage 
of  silver.  "  Our  credit,"  he  said,  "  would  be  absolutely  ruined 
here  if  silver  were  to  be  made  a  legal  tender  in  any  large 
amount."  This  letter  did  not  reach  the  Secretary,  of  course, 
for  several  days,  but  he  apparently  had  intimations  of  the 
feeling  in  the  London  market,  for  two  days  later,  the  18th,  he 
wrote  to  Belmont  that  upon  mature  reflection  he  did  not  feel 
sure  that  he  had  been  entirely  right  in  the  first  part  of  his 
previous  letter,  which  was  based,  not  upon  his  conviction  as 
to  the  question,  but  upon  the  probable  effect  of  a  public 
declaration.  He  did  not  believe  that  Congress  would  ever 
seriously  entertain  such  a  proposition  as  the  payment  in  silver 
coin  of  bonds  offered  at  par  in  gold.  As  to  himself,  it  was  a 
proposition  so  obnoxious  that  he  repelled  it  almost  as  an  in- 
sult. "  If,"  he  concluded,  "  those  engaged  in  the  sale  of  these 
bonds  should,  upon  full  reflection,  think  that  I  ought  to  give 
the  weight  of  my  official  influence  in  clearing  away  an  honest 
doubt,  I  will  do  it,  but  would  prefer  not  to  seem  by  a  formal 
declaration  to  suggest  a  belief  that  I  think  Congress  or  the 
American  people  would  ever  resort  to  such  an  expedient  to 
make  easier  the  payment  of  their  debts."  After  a  few  hours' 
further  reflection  the  Secretary  determined  to  partially  yield 
to  Belmont's  request,  and  a  letter  received  on  the  19th  from 
Francis  O.  French,  of  !N"ew  York,  furnished  the  opportunity. 
The  Secretary's  reply  was  as  follows: 


176  AWAKENING  IN  THE  UNITED  STATES 

"TREASURY  DEPARTMENT. 
Washington,  D.  C.,  June  19,  1877. 

"  Sir,  —  Your  letter  of  the  18th  instant,  in  which  you  inquire 
whether  the  4-per-cent.  bonds  now  being  sold  by  the  government  are 
payable,  principal  and  interest,  in  gold  coin,  is  received.  The  subject, 
from  its  great  importance,  has  demanded  and  received  careful  con- 
sideration. 

"  Under  laws  now  in  force  there  is  no  coin  issued  or  issuable  in 
which  the  principal  of  the  4-per-cent.  bonds  is  redeemable,  or  the 
interest  payable,  except  the  gold  coins  of  the  United  States,  of  the 
standard  value  fixed  by  laws  in  force  on  the  14th  of  July,  1870, 
when  the  bonds  were  authorized. 

"  The  government  exacts  in  exchange  for  these  bonds  payment  at 
their  face  in  such  gold  coin,  and  it  is  not  to  be  anticipated  that  any 
future  legislation  of  Congress  or  any  action  of  any  department  of 
the  government  would  sanction  or  tolerate  the  redemption  of  the 
principal  of  these  bonds  or  the  payment  of  the  interest  thereon  in 
coin  of  less  value  than  the  coin  authorized  by  law  at  the  time  of 
the  issue  of  the  bonds,  being  the  coin  exacted  by  the  government 
in  exchange  for  the  same. 

"  The  essential  element  of  good  faith  in  preserving  the  equality  in 
value  between  the  coinage  in  which  the  government  receives  and 
that  in  which  it  pays  these  bonds  will  be  sacredly  observed  by  the 
government  and  the  people  of  the  United  States,  whatever  may  be 
the  system  of  coinage  which  the  general  policy  of  the  nation  may 
at  any  time  adopt. 

"  This  principle  is  impressed  upon  the  text  of  the  law  of  July  14, 
1870,  under  which  the  4-per-cent.  bonds  are  issued,  and  requires,  in 
the  opinion  of  the  executive  department  of  the  government,  the  re- 
demption of  these  bonds  and  the  payment  of  their  interest  in  coin 
of  equal  value  with  that  which  the  government  receives  from  its 
issue. 

"  Very  respectfully, 

"JOHN  SHERMAN,  Secretary. 

"  Francis  O.  French,  Esq., 

94  Broadway,  New  York." 

Copies  of  this  letter  were  sent  to  members  of  the  bond  syn- 
dicate with  a  personal  note  from  the  Secretary  to  the  effect 
that  the  views  therein  expressed  were  concurred  in  by  the 
President  and  all  his  cabinet.  It  had  an  immediate  effect  on 
the  market.  The  4£  bonds  advanced  f  in  gold  the  next  day. 
There  were  numerous  expressions  of  approval  of  the  position 
of  the  administration,  and,  whatever  its  effect  upon  the  silver 
advocates,  it  seems  probable  that  it  strengthened  the  natural 
conservatism  of  the  senators  who  were  watching  affairs  from 
their  respective  homes.  For  a  time  after  this  the  refunding 
operations  progressed  smoothly  and  successfully,  the  Secretary 


RESULTS  OP  THE  OCTOBER  ELECTIONS  177 

being  able  to  dispose  of  a  large  quantity  of  4-per-cents.  by  sub- 
scription both  here  and  abroad.  English  investors  bought  the 
securities  freely,  none  other  having  any  better  standing  in 
the  markets  of  Europe.  Their  sale  was  hindered  only  by  the 
final  preparations  of  France  to  resume  specie  payments,  while 
Germany  was  accumulating  all  the  gold  it  could  in  exchange 
for  silver.  Meanwhile  silver  campaigns  were  being  carried 
on  in  the  Western  States,  on  platforms  from  which  quotations 
have  been  made.  Writing  to  the  London  agent,  September 
22,  Secretary  Sherman  said  that  the  silver  question  was  dis- 
turbing the  market  somewhat,  and  might,  if  unwisely  decided, 
suspend  further  sales.  "  But,"  he  added,  "  if,  as  I  hope,  silver 
coin  will  only  be  authorized  in  exchange  for  United  States 
notes,  it  will  help  us  and  not  hinder  us."  The  Secretary,  as 
well  as  other  shrewd  observers,  saw  that  the  sentiment  had 
developed  great  strength  and  would  surely  make  itself  felt 
in  the  coming  Congress. 

In  October  the  results  of  the  silver  campaigns  were  re- 
vealed. The  people  had  contracted  the  mania.  President 
Hayes  had  carried  Ohio  in  1876  by  7500  plurality;  in  1877 
the  Democratic  candidate  for  governor  was  elected  by  a  plu- 
rality of  22,520  over  the  Eepublican  candidate.  Though  the 
Republicans  had  declared  for  free  silver  coinage,  the  people 
went  over  to  the  Democrats,  who  declared  the  Republicans  re- 
sponsible for  the  demonetization  of  the  metal,  and  who,  besides, 
demanded  the  immediate  repeal  of  the  Resumption  Act  and  the 
retention  of  the  greenback  currency  "  as  the  best  paper  money 
we  ever  had."  Coming  from  their  own  state,  this  verdict 
could  not  have  been  very  encouraging  to  the  President  and 
the  Secretary  of  the  Treasury,  whose  duty  it  was  under  the 
law  to  secure  gold  enough  to  resume  specie  payments  in  fifteen 
months.  In  Pennsylvania  a  treasurer  was  elected,  the  Demo- 
cratic candidate  winning  by  9900  plurality,  although  a  year 
before  the  Republican  plurality  had  been  17,960.  The  green- 
12 


178  AWAKENING  IN  THE  UNITED  STATES 

backers  ran  a  separate  ticket,  which  received  52,850  votes,  or 
nearly  10  per  cent,  of  the  whole.  In  this  state  also,  while  the 
Republicans  demanded  the  repeal  of  the  act  demonetizing 
silver,  the  Democratic  campaign  was  conducted  on  more  radi- 
cal principles.  The  Republicans  held  Iowa  by  a  reduced  plu- 
rality, the  greenback  ticket  receiving  34,220  votes,  or  about 
14  per  cent,  of  the  whole  number  cast. 

The  foreign  market  was  much  disturbed  over  the  news. 
The  London  Times  treated  the  results  as  a  triumph  of  infla- 
tionists and  silver  advocates.  England  was  not  disposed  to 
treat  our  securities  very  kindly  at  that  time,  because,  the  crops 
being  short  in  Europe,  the  indications  were  that  our  exports 
of  cereals  would  cause  an  extensive  balance  in  our  favor  and 
lead  to  a  drain  of  gold  from  the  Bank  of  England,  which  had 
already  suffered  in  spite  of  a  high  discount  rate. 

The  Forty-fifth  Congress,  which  assembled  in  special  ses- 
sion October  15,  with  such  expressions  of  the  popular  will 
fresh  in  mind,  consisted,  in  the  Senate,  of  39  Republicans,  36 
Democrats,  and  David  Davis,  independent;  in  the  House,  of 
153  Democrats  and  140  Republicans.  Bland,  of  Missouri,  as- 
sumed the  leadership  of  the  silverites  in  the  House,  and,  with- 
out waiting  for  the  regular  session  to  open,  introduced  a  new 
bill  "  to  authorize  the  coinage  of  the  standard  silver  dollar  and 
restore  its  legal-tender  character."  The  rules  were  at  once 
suspended,  and  the  bill  passed  without  debate,  by  a  vote  of  1G4 
to  34,  the  negative  votes  being  almost  entirely  from  Xew  York 
and  New  England. 

This  vote  took  the  financial  world  by  surprise,  as  it  was 
manifest  that  the  House  at  least  Avould  pass  a  free-silver  bill 
over  a  veto,  even  if  that  obstacle  should  be  interposed.  As  soon 
as  the  news  reached  ISTew  York,  Belmont  telegraphed  to  Sher- 
man that  the  passage  of  the  bill  by  the  Senate  would  destroy  all 
chances  of  refunding  and  resumption;  then  he  sat  down  and 
wrote  a  long  letter  to  the  Secretary,  treating  the  action  of  the 


THE  BLAND  BILL  AND  THE  BOND  SYNDICATE  179 

House,  in  the  most  vigorous  language,  as  an  effort  to  violate 
the  nation's  faith  and  honor.1  While  he  was  writing  this 
Sherman  was  writing  a  reply  to  the  telegram.  He  said: 

"  The  passage  of  the  silver  bill  in  its  present  form  would,  as  you 
say,  stop  funding  and  resumption,  but  I  have  no  expectation  that  it 
will  pass,  except  a  provision  for  issuing  the  silver  dollar  on  govern- 
ment account  in  exchange  for  United  States  notes.  In  case  it  passes 
and  you  shall  have  assented  to  make  the  call  I  ask  for,  I  will 
promptly  assume  the  payment  of  the  bonds  called,  for  the  passage 
of  such  a  bill  might  fairly  be  regarded  as  a  suspension  of  your  con- 
tract and  a  practical  repeal  of  the  refunding  act.  We  must  act  upon 
the  laws  as  they  are,  and  I  have  a  confident  hope  that  they  will  not 
be  materially  changed." 

The  same  day  the  president  of  the  First  National  Bank  of 
New  York  and  a  member  of  the  bond  syndicate  wrote  to 
Sherman  that  "  two  gentlemen  of  prominence  and  undoubted 
character,"  who  were  not  in  sympathy  with  the  silver  move- 
ment, had  conversed  with  the  President  upon  the  subject 
within  a  week,  and  had  left  him  with  the  belief  that  he  would 
sign  the  Bland  measure.  There  was  little  hope  of  its  defeat. 
It  was  telegraphed  to  London  that  it  would  surely  pass,  where- 
upon the  Rothschilds  requested  the  Treasury  agent  there  to 

i  The  following  extracts  from  Mr.  Belmont's  letter  show  the  feel- 
ing produced  in  financial  circles  by  the  event: 

"  To  do  such  a  thing  now  as  is  contemplated  by  the  Bland  Silver 
Bill,  when  the  federal  finances  are  in  a  flourishing  condition,  when 
the  premium  on  gold  has  been  reduced  2%  and  3  per  cent.,  and  when 
our  funded  debt  sells  equal  to  that  of  any  other  public  security  in  the 
world,  is  actually  as  if  a  man  of  wealth  and  position,  who  had,  by  a 
lifelong  course  of  strict  honesty,  acquired  the  well-earned  confidence 
and  respect  of  his  fellow-citizens  and  of  the  outer  world,  should,  in 
the  midst  of  his  affluence  and  without  any  palliating  excuse  of  any 
temptation  of  want  or  necessity,  commit  open  theft. 

"  When  you  look  back  and  find  in  the  archives  of  your  depart- 
ment the  proud  records  of  a  nation's  faith,  kept  inviolate  with  a  most 
punctilious  and  chivalrous  spirit  during  a  century,  amidst  all  the - 
trials  of  foreign  and  civil  war,  which  strained  the  resources  of  our 
country  to  the  very  verge  of  ruin,  the  task  before  you  is  certainly  a 
difficult  and  harassing  one;  but  while  the  path  of  duty  is  often 
narrow  and  difficult,  it  is  always  straight  and  so  well  defined  that  it 
can  never  be  mistaken.  Sound  financial  policy  and  love  of  our 
country's  fair  name  alike  demand  from  those  to  whom  the  adminis- 
tration of  its  affairs  have  been  intrusted  the  most  uncompromising 
hostility  to  the  blind  and  dishonest  frenzy  which  has  taken  hold  of 
Congress." 


180  AWAKENING  IN  THE  UNITED  STATES 

inform  his  government  that  it  was  highly  important  to  the 
credit  of  the  United  States  that  a  statement  be  made  of  assur- 
ance of  a  veto  of  any  bill  which  did  not  exempt  the  principal 
and  interest  of  the  public  debt  from  its  operations.  The  price 
of  the  bonds  dropped,  sales  completely  stopped,  and  the  gold 
premium  advanced,  while  the  financial  world  brought  its  argu- 
ments to  bear  on  the  Finance  Committee  of  the  Senate,  of 
which  Morrill  of  Vermont  had  become  chairman.  It  soon 
transpired  that  a  majority  of  that  committee  could  not  be  se- 
cured for  the  recommendation  of  an  absolutely  free-silver-coin- 
age measure  like  the  Bland  Bill,  but  that  a  majority  would 
favor  doing  something  for  the  metal.  Morrill  of  Vermont  and 
Dawes  of  Massachusetts,  Republicans,  and  Bayard  of  Delaware 
and  Kernan  of  New  York,  Democrats,  were  absolutely  opposed 
to  any  measure  for  the  issue  of  silver  except  in  exchange  for 
government  notes  and  of  limited  legal  tender.  In  this  situa- 
tion Allison,  of  Iowa,  proposed  a  compromise  amendment, 
changing  the  bill  from  a  free-coinage  measure  to  one  for 
the  purchase  of  silver  bullion  at  the  market  price,  and  the 
coining  therefrom  of  standard  legal-tender  dollars,  the  mini- 
mum purchase  being  $2,000,000  worth  a  month  and  the  maxi- 
mum, $4,000,000. 

Such  was  the  situation  when  the  regular  session  of  Con- 
gress began.  The  President,  in  his  message,  approached  the 
subject  with  some  honeyed  words  for  the  silver  advocates, 
but  in  the  end  asked  that  in  any  legislation  providing  for  a 
silver  coinage  of  legal-tender  quality  there  might  be  a  firm 
provision  exempting  the  public  debt  already  issued  and  out- 
standing from  payment  in  any  coinage  of  less  commercial 
value  than  the  existing  gold  coinage.  While  he  held  that 
neither  the  interests  of  the  government  nor  of  the  people 
would  be  promoted  by  disparaging  silver,  and  that  legislation 
looking  to  the  maintenance  of  the  volume  of  intrinsic  money 
to  as  full  a  measure  of  both  metals  as  their  relative  commer- 


WARNING  OF  SECRETARY  SHERMAN  181 

eial  values  would  permit  would  be  neither  unjust  nor  inex- 
pedient, he  also  held  that  it  would  be  far  better  to  pay  the  pub- 
lic debt  in  gold  than  to  seem  to  take  advantage  of  the  un- 
foreseen fall  in  silver  bullion  to  pay  in  a  new  issue  of  silver 
coin,  thus  made  so  much  less  valuable.  The  President's  words 
were  such  as  to  leave  the  always  sensitive  financial  world  in 
doubt  as  to  what  course  he  would  pursue  in  any  given  con- 
tingency. 

Secretaiy  Sherman  was  much  more  positive  in  his  report. 
He  recommended  any  legislation  that  would  maintain  the 
current  value  of  silver  coins  at  par  with  gold,  the  gold  dollar 
being  inconveniently  small  for  the  multitude  of  daily  transac- 
tions, and  silver  coins  could,  to  a  certain  extent,  pass  readily 
among  all  classes  and  be  of  great  convenience.  But  he  added : 
"  This  coin  should  be  subject  to  the  same  rule  as  to  issue  and 
convertibility  as  other  forms  of  money.  If  the  market  value 
of  silver  in  it  were  less  than  that  of  gold  coin  of  the  same  de- 
nomination, and  were  issued  in  unlimited  quantities  and  made 
a  legal  tender  for  all  debts,  it  would  demonetize  gold  and 
depreciate  our  paper  currency." 

Reviewing  the  history  of  the  coinage  acts  of  the  govern- 
ment, and  holding  that  the  importance  of  the  gold  standard 
was  everywhere  conceded,  he  expressed  the  belief  that  all  the 
beneficial  results  hoped  for  from  a  liberal  issue  of  silver  coin 
could  be  secured  by  issuing  it  in  pursuance  of  the  general  pol- 
icy of  the  act  of  1853,  in  exchange  for  United  States  notes, 
coined  from  bullion  purchased  in  the  open  market,  and  main- 
taining it  by  redemption  or  otherwise  at  par  with  gold  coin, 
making  it  a  legal  tender  for  such  sums  and  on  such  contracts 
as  would  secure  its  most  general  circulation.  In  conclusion  he 


"  To  still  further  secure  a  fixed  relative  value  of  silver  and  gold, 
the  United  States  might  invite  an  international  convention  of  com- 
mercial nations.  Even  such  a  convention,  while  it  might  check  the 
fall  of  silver,  could  not  prevent  the  operation  of  that  higher  law  which 


places  the  market  value  of  silver  above  human  control.  Issued 
upon  the  conditions  here  stated,  the  Secretary  is  of  opinion  that  the 
silver  dollar  will  be  a  great  public  advantage,  but  that  if  issued 
without  limit  upon  the  demand  of  the  owners  of  silver  bullion  it  will 
be  a  great  public  injury." 

At  the  same  time  Chairman  Morrill  saw  in  the  suggestion 
of  an  international  conference  the  possibility  of  delaying  action 
on  a  measure  which  appeared  to  him  to  invite  financial  disas- 
ter, and  he  wrote  to  the  Secretary,  suggesting  that  the  Presi- 
dent promptly  initiate  some  inquiry  or  negotiation  with  for- 
eign governments,  to  see  if  we  might  not  be  able  to  treat  with 
them  so  far  as  to  indicate  an  agreement  upon  a  proper  ratio  for 
the  coinage  of  both  gold  and  silver.  The  refusal  of  his  com- 
mittee to  exempt  in  the  bill  those  bonds  negotiated  at  a  low  rate 
of  interest  since  1S73  he  declared  to  be  a  direct  and  palpable 
violation  of  the  statutes,  and  he  considered  that  the  adoption 
of  free  silver  coinage  by  the  United  States,  independently, 
would  encourage  European  nations  to  adhere  to  the  gold 
standard,  and  that  American  securities  would  be  sent  home 
for  the  most  they  would  fetch. 

Notwithstanding  the  serious  condition  of  affairs,  Sherman 
resolutely  continued  his  refunding  efforts,  urging  the  syndi- 
cate to  endeavor  to  place  the  4-per-cents.  and  expressing  the 
belief  that  no  unfavorable  laws  would  be  enacted.  Belmont 
and  his  associates  replied  that  it  was  useless  to  try  to  sell  the 
bonds  at  par,  or  even  at  the  sacrifice  of  the  syndicate's  com- 
mission, when  they  .were  being  offered  in  the  open  market  at 
99.  The  bill  was  sure  to  pass  the  Senate,  he  thought,  the  Alli- 
son amendment  really  being  "  immaterial,"  for  the  limitation 
of  the  amount  to  be  coined  seemed  to  the  syndicate  of  minor 
importance  and  insufficient  to  allay  the  apprehensions  of  in- 
vestors. 

By  the  time  the  Senate  had  reached  a  consideration  of  the 
bill,  about  $14,000,000  in  bonds  had  been  sent  back  from 
Europe  for  sale,  and  every  steamer  was  bringing  a  fresh  sup- 


BELMONT  FAVORS  A  CONFERENCE  183 

ply,  so  that,  although  the  natural  balance  of  trade  was  in  our 
favor,  no  gold  was  imported.  Thus  England  paid  for  our 
cereals  with  our  own  bonds.  In  time  the  syndicate,  as  well  as 
Morrill  and  others,  began  to  consider  an  international  confer- 
ence, or  a  conference,  at  least,  with  the  Latin  Union,  as  offer- 
ing the  only  reasonable  grounds  for  hope  from  escape  from  the 
silver  sentiment  in  Congress.  Writing  to  Sherman,  Novem- 
ber 29,  Belmont  said: 

"  I  wish  the  intelligent  and  well-meaning  portion  of  the  silver  ad- 
vocates in  Congress  (those  who  intend  a  bimetallic  circulation  on 
sound  and  honest  principles)  could  be  induced  to  a  calmer  considera- 
tion of  the  whole  subject,  and  would  not  allow  themselves  to  be 
dragged  in  the  wake  of  ignorant  demagogues  who  bellow  out  their 
insane  cry  against  the  bondholder,  profess  to  be  the  poor  man's 
friend(?),  and  are  his  toorst  enemies.  We  might  then,  in  all  proba- 
bility, arrive  at  the  passage  of  a  bill  for  the  appointment  of  half  a 
dozen,  or  a  dozen,  scientific  and  practical  men  to  meet  an  equal  num- 
ber of  experts  on  the  part  of  the  Latin  Union  in  conference.  Such 
a  congress  can  certainly  deal  better  with  this  important  question 
than  can  be  done  by  hasty  and  prejudiced  legislation,  in  which  but 
too  often  the  public  good  is  sacrificed  to  sectional  and  party  feeling. 
The  position  and  interests  of  France,  the  leading  power  in  the  Latin 
Union,  are  almost  identical  with  ours  in  regard  to  this  question,  and 
I  have  reason  to  know  that  some  of  her  wisest  and  most  influential 
financiers  are  in  favor  of  a  bimetallic  circulation.  Why  not  try  to 
go  hand  in  hand  with  a  government  which  has  so  admirably  managed 
its  finances  during  the  last  six  years  that,  notwithstanding  war,  do- 
feat,  and  spoliation,  and  in  the  face  of  the  most  threatening  political 
situation,  her  financial  and  commercial  condition  is  at  this  moment 
sounder  than  that  of  her  conqueror,  and,  perhaps,  better  even  than 
that  of  England? 

"  I  am  not  at  all  a  blind  and  stubborn  opponent  of  silver.  On  the 
contrary,  I  should  be  sorry  to  see  hasty  legislation  excluding  it  alto- 
gether, but  national  faith  and  honor  must  not  be  jeopardized.  That 
once  secured  and  put  on  its  former  sound  basis,  I  will  go  as  far  as 
anybody  towards  protecting  our  large  silver  productions  and  trying 
to  secure  a  sounder  medium  of  circulation  of  sufficient  volume  to  re- 
store prosperity  and  activity  of  industry  and  commerce,  by  which 
debtor  and  creditor  may  both  be  benefited  alike  and  become  better 
friends,  so  as  to  understand  that  their  interests  are  identical,  and 
that  only  by  laws  of  equal  justice  to  West  and  East,  North  and 
South,  can  Ave  hope  to  resume  again  our  position  in  the  front  rank  of 
the  great  commercial  and  agricultural  nations  of  the  world." 

But  the  silver  men,  now  fully  aroused  all  over  the  coun- 
try, said  that  all  warnings  were  dictated  by  selfishness.  They 
claimed  that  the  bankers  and  bondholders  were  desperately  in- 
terested in  the  gold  standard  because  it  gave  them  control  of 


184  AWAKENING  IN  THE  UNITED  STATES 

the  markets  and  increased  their  income  through  the  apprecia- 
tion of  gold,  that  coined  silver  was  as  much  "  specie  "  as  coined 
gold,  and  that  the  coinage  of  the  former  would,  instead  of  hin- 
dering resumption,  aid  it  by  providing  the  treasury  with  more 
specie  and  enabling  the  people  to  buy  the  new  bonds  with 
silver.  Offers  of  this  kind  came  to  the  Secretary,  and  not  en- 
tirely from  the  West.  Colgate  &  Co.,  of  New  York,  offered 
to  buy  at  par  $150,000  of  4-per-cents.,  principal  and  interest 
payable  in  silver  dollars,  paying  for  them  an  amount  of  silver 
necessary  to  produce  the  sum  required  for  the  payment  in 
silver  dollars  at  par.  The  offer  at  once  got  into  public  print, 
although  both  the  Secretary  and  Colgate  &  Co.  denied  giv- 
ing it  out.  Sherman  replied  courteously  that,  as  gold  coin  was 
the  only  coin  yet  authorized  by  law,  he  could  only  receive 
gold  coins  for  bonds.  He  gave  them  to  understand  that  he 
was  not  ignorant  of  the  fact  that  with  $137,337  of  gold  coin 
they  could  buy  enough  silver  dollars  to  pay  for  $150,000  worth 
of  bonds,  netting  them  the  handsome  profit  of  $12,663.  But 
how  about  the  government  ?  Colgate  &  Co.  made  a  rather 
discourteous  reply,  and  the  matter  ended,  though  it  was  used 
as  an  argument  for  paying  outstanding  bonds  in  silver. 

In  pursuance  of  this  argument  Stanley  Matthews,  who  had 
been  chosen  to  succeed  John  Sherman  in  the  Senate,  intro- 
duced a  resolution  early  in  January,  1878,  boldly  declaring 
that,  the  principal  of  and  the  interest  on  the  public  debt, 
issued  or  authorized,  prior  to  the  demonetization  of  silver,  by 
the  acts  of  1869  and  1870,  were  payable  at  the  option  of  the 
government  in  silver  dollars  without  violation  of  public  faith 
or  in  derogation  of  the  rights  of  the  public  creditor.  The  ma- 
jority of  the  Senate  refused  to  refer  it  to  a  committee  or  to 
make  it  a  joint  resolution,  which  would  have  required  the 
signature  of  the  President,  or  to  accept  any  amendment  what- 
ever, and  it  passed  at  once  by  a  vote  of  43  to  22.  The  House 
passed  it  on  January  29  by  a  vote  of  189  to  79. 


EFFECTS  OF  THE  MATTHEWS  RESOLUTION  185 

The  market  for  United  States  bonds  was  upset  completely. 
Our  securities  dropped  If  per  cent,  in  London,  and  were  of- 
fered in  large  quantities.  It  began  to  be  realized  that  the 
silver  bill  might  pass  over  a  veto.  The  London  agent  in  the 
refunding  operations  wrote  to  Sherman  that  the  argument 
being  used  in  Congress  that  the  silver  dollar,  if  remonetized, 
would  advance  to  par  with  gold  was  a  grievous  mistake.  "  The 
great  nations  of  the  earth,"  he  said,  "  will  never  again  recog- 
nize silver  as  a  standard.  Further  demonetization  is  far  more 
likely  to  occur  than  any  remonetization."  This  was  not  en- 
couraging to  those  who  were  hoping  for  saving  results  from  an 
international  conference. 

Sherman  threw  all  the  optimism  he  could  into  the  situa- 
tion. He  still  hoped  that  the  Bland-Allison  Bill  would  be 
amended  so  as  to  except  the  public  debt,  but  he  was  extremely 
embarrassed,  and  said  he  might  have  to  protect  the  call  already 
made  with  gold  on  hand,  thus  depleting  his  reserve  for  resump- 
tion. "  I  cannot  hope  to  succeed,"  he  said,  "  if  the  result  of 
the  pending  legislation  disables  me  from  selling  4-per-cent. 
bonds.  This  is  a  rather  discouraging  prospect  for  the  future, 
but  I  feel  that  I  have  done  my  utmost  to  carry  out  the  law  and 
will  still  continue  all  proper  effort  in  the  hope  that  something 
will  turn  up  that  will  enable  me  to  succeed." 

As  the  syndicate  could  do  nothing,  or,  at  least,  was  doing 
nothing,  to  dispose  of  4-per-cents.  under  the  arrangements 
made  with  the  Secretary,  and  as  he  was  convinced  that  his  suc- 
cess depended  upon  their  sale,  he  gave  notice  to  the  syndicate 
January  14  of  the  termination  of  the  contract,  and  of  his  deci- 
sion to  open  subscriptions  in  the  United  States  on  a  different 
plan,  payments  to  be  made  in  coin,  called  bonds  of  the  United 
States,  or  gold  certificates.  He  threw  himself  wholly  on  the 
mercy  of  a  patriotic  people,  knowing  that  if  they  subscribed  at 
all  they  must  pay  in  gold  coin  or  certificates  or  called  bonds,  for 
there  was  no  silver  coin  in  circulation  to  speak  of.  He  was  dis- 


186  AWAKENING  IN  THE  UNITED  STATES 

posed  to  discontinue  all  London  operations,  and  so  informed 
the  agent  there  on  the  28th,  adding,  "  We  may  as  well  admit 
that  the  prospect  is  that  the  Bland  Bill,  or  some  other  bill  very 
nearly  as  bad,  will  pass  both  Houses  by  a  two-thirds  vote,  and, 
although  there  may  be  some  delay,  it  is  likely  that  silver  will 
be  remonetized  in  this  country  upon  the  substantial  basis  of  the 
old  law." 

During  the  debate  in  the  Senate  various  amendments  were 
offered  from  both  sides.  One,  requiring  $100,000,000  in  sil- 
ver dollars  to  be  coined  within  three  years,  was  lost  by  a  vote 
of  26  to  41.  No  amendments  for  a  different  ratio  could  secure 
a  majority.  The  Allison  compromise  was  accepted  as  the  most 
practical  solution  by  the  silver  men  so  long  as  free  coinage 
could  not  be  secured;  and  while  the  more  radical  silver  men 
considered  an  international  conference  as  unnecessary,  or  as 
dangerous,  the  amendment,  which  was  made  the  second  section 
of  the  bill,  providing  that  immediately  after  the  passage  of  the 
act  the  President  should  invite  the  governments  of  the  coun- 
tries composing  the  Latin  Union,  and  of  such  other  European 
nations  as  he  might  deem  advisable,  to  join  the  United  States 
in  a  conference  "  to  adopt  a  common  ratio  between  silver  and 
gold  for  the  purpose  of  establishing,  internationally,  the  use 
of  bimetallic  money,  and  securing  fixity  of  relative  value  be- 
tween those  metals,"  easily  passed.  The  conference  was  to 
be  held  within  six  months  of  the  passage  of  the  act  at  some 
place  to  be  agreed  upon,  by  the  executives  of  the  governments, 
whenever  any  three  of  them  had  signified  their  willingness  to 
unite.  In  this  shape  the  bill  passed  the  Senate  February  15, 
by  a  vote  of  48  to  21;  six  days  later,  it  came  up  in  the  House 
on  a  motion  to  concur  in  the  Senate  amendments,  and  it  passed 
by  more  than  a  two-thirds  vote  and  after  a  debate  limited  to  one 
hour.  The  amendments  affixed  to  the  measure  were  anything 
but  satisfactory  to  the  friends  of  silver.  They  believed  the 
people  of  the  LTnited  States  demanded  the  complete  restoration 


PROVISIONS  FOR  A  CONFERENCE  187 

of  the  coinage  regulations  existing  previous  to  1873,  no  matter 
what  other  nations  did,  and,  if  they  had  considered  it  safe  to 
have  made  a  longer  fight,  they  would  have  insisted  upon  free 
coinage.  The  opinion  of  most  of  them  was  fairly  stated  by 
J31and  when,  referring  to  the  mutilation  of  his  bill,  he  said: 
"  It  is  now  a  question  at  this  late  day  of  the  session  whether  we 
are  to  take  this  bill,  or  whether  a  determination  to  disagree 
with  the  Senate  shall  defeat  the  legislation  upon  this  subject. 
I  do  not  like  this  bill.  It  is  not  what  the  country  expects.  But 
I  am  in  favor  of  taking  this  now,  as  making  one  step  in  the 
right  direction."  The  average  Congressman  considered  the 
feelings  of  the  voters  such  that  his  "  political  scalp,"  depended 
on  his  earnestness  for  free  coinage  by  the  United  States  at 
once. 

K'o  attention  whatever  was  given  to  the  provision  regard- 
ing an  international  conference  in  the  House.  It  was  regarded 
there  simply  as  an  effort  to  avoid  free  coinage,  and,  as  has  been 
said,  the  radical  silver  men  in  the  Senate  regarded  it  with  dis- 
approbation or  suspicion.  They  were  aware  that  the  sugges- 
tion of  a  conference  had  come  from  those  opposed  to  free  silver 
coinage,  and  even  Jones  of  Nevada  voted  against  it,  although 
he  had  advocated  such  a  conference  in  the  report  of  the  Silver 
Commission.  Allison,  who  had  the  management  of  the  meas- 
ure, regarded  it  of  vast  importance  to  the  ultimate  success  of 
silver  coinage.  It  is  doubtful  if  he  and  others  would  have 
favored  the  measure  without  that  provision.  They  looked 
upon  the  coinage  of  silver  at  the  ratio  of  16  to  1  as  a  sort  of 
temporary  affair,  calculated  to  satisfy  public  sentiment  for 
the  time,  but  not  calculated  to  restore  in  any  sense  the  double 
standard.  In  explaining  the  necessity  of  a  conference  Allison 
said : 

"We,  by  our  legislation  here,  fix  the  value  of  a  silver  dollar  at 
412^  grains,  which  is  the  relation  of  10  to  1.  The  bimetallic  nations 
of  the  world  to-day  have  the  fixed  relation  of  1.~.50  to  1.  which  over- 
values silver  S1/^  per  cent.,  as  compared  with  the  monetary  unit  we 


188  AWAKENING  IN  THE  UNITED  STATES 

propose.  .  .  .  The  result  will  be  either  that  the  bimetallic  nations 
of  Europe  will  keep  their  mints  closed,  or,  when  they  open  their 
mints  to  the  free  coinage  of  silver,  every  silver  dollar  that  is  in  the 
United  States  will  flee  again  to  Europe,  as  it  did  after  the  unfortu- 
nate and  mischievous  legislation  of  1834,  because  we  then  estab- 
lished a  wrong  relation  between  the  two  metals." 

The  plain  inference  from  this  is,  that  some  of  those  who 
were  advocating  the  measure  had  no  hopes  of  keeping  the  two 
metals  in  concurrent  circulation  at  full  legal  tender  without 
international  co-operation.  One  naturally  asks,  therefore, 
why  in  seeking  to  restore  the  silver  coinage  the  French  ratio 
was  not  at  once  adopted,  for,  if  Europe  closed  her  mints,  the 
burden  of  maintaining  the  parity  would  be  thrown  entirely 
upon  the  United  States,  and  if  Europe  opened  her  mints  the 
United  States  would  lose  the  very  metal  they  were  trying  to 
rehabilitate.  A  sufficient  answer  to  this  is  that  the  passion 
of  the  hour  was  "  the  dollar  of  our  daddies." 

The  majority  of  the  silver  men  claimed  that  our  coinage 
was  purely  a  domestic  business,  anyway;  that  it  made  no  differ- 
ence what  Europe  had  done  or  might  do.  One  of  the  Southern 
senators  had  given  the  matter  of  ratios  so  little  thought  that 
he  was  compelled  to  ask  for  information  as  to  what  was 
the  ratio  in  Europe,  and  also  that  fixed  by  the  bill  for  which  he 
had  been  earnestly  and  scrupulously  talking  and  voting.  An- 
other wanted  no  foreign  alliances  or  entanglements.  "  Let 
other  nations  fix  their  money  standard  as  they  will,"  he  said, 
"  let  us  fix  ours  as  suits  our  convenience."  After  having 
worked  and  debated  for  weeks  to  secure  a  partial  restoration  of 
the  old  dollar,  he  did  not  propose,  if  he  could  help  it,  to  go 
abroad  to  find  some  sanction  for  the  effort  in  the  esteem  and 
approbation  of  foreign  nations.  Edmunds,  of  Vermont,  who 
was  really  the  only  outspoken  advocate  of  the  gold  standard  in 
the  Senate  then,  and  whose  sarcastic  thrusts  were  frequent 
features  of  the  debate,  asked  Allison  if  he  would  not  strike 
out  that  provision  limiting  the  conference  to  the  consideration 


SARCASTIC  THRUSTS  OP  EDMUNDS  189 

of  the  double  standard  and  allow  it  to  consider  also  the  expe- 
diency of  a  single  standard. 

"  That  I  cannot  consent  to,"  replied  Allison.  "  That  is  the 
very  thing  we  are  struggling  for  here  now,  and  I  do  not  pro- 
pose to  treat  it  away." 

"  Is  it  treating  it  away  to  be  willing  to  talk  about  it?  "  asked 
Edmunds. 

"  I  think  so,"  was  the  reply. 

"  I  think  so,  too,"  quickly  retorted  the  Vermont  statesman, 
"  because  you  cannot  stand  on  the  reason  of  it."  Edmunds 
was  the  only  senator  of  the  21  voting  against  the  final  passage 
of  the  bill  who  voted  against  the  amendment  for  a  conference, 
and  his  opposition,  as  he  explained,  was  because  it  would  be 
a  conference  tied  up  "  to  this  thing  of  a  double  standard  of 
value,"  which  he  likened  to  thimble-rigging  he  had  seen  at 
shows  where  the  pea,  that  could  not,  in  the  nature  of  things, 
be  under  both  thimbles  at  the  same  time,  was  always  put  under 
the  one  that  cheated  the  public. 

President  Hayes  sent  in  his  veto  message  on  February  28, 
strongly  arguing  that  the  right  to  pay  duties  in  silver  or  in 
certificates  for  silver  deposits  would,  when  issued  in  sufficient 
amount  to  circulate,  put  an  end  to  the  receipts  of  revenue  in 
gold,  and  compel  the  payment  of  silver  for  both  principal  and 
interest  of  the  public  debt,  and  thus  break  the  pledges  the 
government  had  practically  made.  The  bill  was  passed  over 
the  veto  the  same  day  by  a  vote  of  46  to  19  in  the  Senate,  and 
196  to  73  in  the  House. 

The  success  of  the  resumption  of  specie  payments,  to  take 
place  by  law  ten  months  later,  depended  now  upon  maintaining 
the  stock  of  coin  already  accumulated  and,  apparently,  upon 
accumulating  considerable  more  from  the  people  of  the  United 
States.  There  seemed  to  be  little  hope  of  help  from  Europe. 
At  this  time  the  government  held  in  various  places  about 
$104,000,000  in  gold  coin,  $11,000,000  in  gold  bullion, 


190  AWAKENING  IN  THE  UNITED  STATES 

$5,000,000  in  silver  coin,  and  $2,800,000  in  silver  bull- 
ion. The  preponderance  of  gold  should  be  noted  here,  as  it 
largely  explains  why  the  immediate  effect  of  the  bill  was  harm- 
less so  far  as  resumption  was  concerned.  After  the  passage  of 
the  act,  legal-tender  silver  dollars  were  made  receivable,  the 
same  as  gold,  in  payments  of  popular  subscriptions  to  the  loan, 
but,  of  course,  there  were  as  yet  none  in  circulation.  The  large 
'New  York  bankers  told  the  Secretary  that  it  would  be  useless 
to  endeavor  to  sell  4-per-cents.,  but  he  kept  at  it,  declining  all 
offers  for  4^-per-cents.  unless  as  good  as  4  at  par,  so  as  not  to 
force  the  4's  to  a  discount.  He  dared  not  advertise  a  4^  loan, 
fearing  the  bankers  would  bid  so  low  as  to  force  the  4's  out. 
Considering  it  essential  to  obtain  $50,000,000  in  gold  coin 
before  January  1,  1879,  in  April  he  went  to  ]^ew  York  to  see 
what  could  be  done.  He  met  the  representatives  of  the  houses 
belonging  to  the  old  syndicate,  but  his  propositions  were  coldly 
received.  They  would  have  nothing  to  do  with  a  4-per-cent. 
loan,  on  account  of  the  uncertainty  of  the  market  and  the 
silver  act,  which  was  harped  on  considerably.  Sherman  asked 
for  an  offer  for  4Vs,  and,  after  consulting  with  the  Rothschilds, 
Belmont  offered  101  for  $100,000,000.  The  Secretary  said 
he  would  accept  101^ 'less  ^  of  1  per  cent,  commission  for 
$50,000,000,  they  to  pay  the  expenses  of  the  loan,  and  they 
finally  accepted  it.  This  seemed  to  make  resumption  certain. 
The  government  was  left  free  to  sell  4's  for  refunding  purposes 
if  it  could,  and,  as  the  market  kept  steadily  improving,  popu- 
lar subscriptions  came  in  briskly,  $377,000,000  being  taken 
mostly  in  this  country  from  January  1,  1878,  to  the  day  of 
resumption,  thereby  displacing  old  6's,  and  saving  in  yearly 
interest  $7,540,000.  '  Our  bonds  on  the  London  market  were 

i  The  skill  with  which  Secretary  Sherman  conducted  the  refund- 
ing and  resumption  operations  in  these  critical  times  cannot  be  easily 
overlooked.  In  abandoning  the  policy  of  placing  bonds  by  syndi- 
cates exclusively  and  adopting  sale  by  public  advertisement  "  under 
circulars,"  he  made  a  considerable  saving  and  kept  the  government's 


CONDITIONS  PRECEDING  THE  SILVER  ACT  191 

by  May  1  three  points  higher  than  during  the  silver  excite- 
ment, opinion  both  here  and  abroad  changing  somewhat  as  to 
the  effect  of  the  law,  the  feeling  being  that  it  might  not  do 
harm  temporarily  and,  when  it  did,  could  be  repealed.  Mean- 
while it  had  checked  somewhat  the  popular  craze  for  free 
silver. 

In  studying  the  conditions  of  that  eventful  year  dispas- 
sionately and  at  this  distance,  one  cannot  fail  to  see  that  there 
was  much  less  ground  for  alarm  over  the  immediate  effects  of 
the  silver  act  than  the  financiers  imagined.  The  monetary 
conditions  of  the  country  at  that  time  were  exceptional.  We 
had  no  silver  coins  to  speak  of,  and  they  were  unquestionably 
needed  to  a  certain  extent.  The  capacity  of  the  mints  was 
limited  to  about  2,000,000  dollar  pieces  a  month,  and,  coined 
at  this  rate,  it  would  have  taken  at  least  eight  years  before 
the  circulation  equalled  the  circulation  of  legal-tender  silver 
coins  in  Germany,  and  twice  that  time  to  have  equalled  the 
silver  circulation  of  France.  Public  convenience  would  have 
been  as  well  and  more  safely  served  by  such  an  issue  of  silver 
of  limited  tender,  but,  when  a  thrifty  people  was  ready  to  ab- 
sorb the  new  coinage,  its  legal-tender  quality  could  do  no 
immediate  harm.  The  danger  lay  in  continuing  after  a  suffi- 
cient amount  of  such  money  had  been  issued.  The  average 
person,  observing  that  the  new  coins  circulated  at  a  parity 
with  gold,  easily  fell  into  the  error  of  thinking  that  the  issue 
could  be  kept  up  indefinitely,  and  that  even  free  silver  could 
work  no  injury.  At  the  time  when  France  was  flooded  with 
silver  and  had  closed  her  mints,  the  United  States  had  little  sil- 
ver and  had  opened  her  mints.  The  latter  were  in  a  position  to 
do  with  safety  what  would  have  been  disastrous  to  France. 

The  United  States  had  much  less  to  fear  from  a  law  like 


indebtedness  largely  in  this  country.  His  total  sale  of  4's  was  $740,- 
847,000,  at  a  cost  of  only  $2,045,802.60.  Under  the  plan  followed  by 
his  predecessors,  it  would  have  cost  $3,704,239. 


192  AWAKENING  IN  THE  UNITED  STATES 

the  Bland-Allison  Act  than  had  the  cause  of  bimetallism.  It 
was,  under  the  circumstances,  more  hostile  to  silver  and  its 
future  interests  than  if  it  had  provided  simply  for  the  coinage 
of  dollars  of  limited  tender,  say,  up  to  $20.  The  latter  would 
have  been  an  announcement  to  the  world  that  while  we  pro- 
posed to  make  silver  a  part  of  our  specie  circulation,  as  it 
was  in  England  and  every  great  commercial  nation,  we  pro- 
posed also  to  adhere  to  the  gold  standard  till  we  could  secure 
international  bimetallism.  Such  a  position  would  have  had  a 
marked  effect  upon  Europe  at  that  time,  for  we  were  large  gold 
producers,  and  also  large  exporters  of  cereals  and  other  prod- 
ucts required  by  Europe,  thus  placing  us  at  an  advantage  in 
the  accumulation  of  gold  at  a  time  when  Europe  was  begin- 
ning to  be  seriously  disturbed  by  its  scarcity,  and  the  diffi- 
culty of  maintaining  a  sufficient  reserve  in  its  banks  of  issue. 
Instead  of  that,  we  foolishly  began  the  coinage  of  silver  of  full 
legal  tender,  and  practically  announced  that  it  was  a  first  step 
towards  an  unrestricted  silver  coinage.  This  was  exactly  what 
commercial  Europe,  which,  in  its  study  of  the  silver  question, 
was  about  five  years  ahead  of  the  United  States,  hoped  for  as  a 
means  of  enabling  it  to  more  easily  maintain  a  gold  standard. 
Europe  held  enough  of  our  securities  to  control  our  gold  if 
we  adopted  a  free  silver  coinage,  and  the  holders  of  these  secu- 
rities were  well  aware  of  it. 

For  the  purposes  of  securing  a  better  appreciation  of  the 
financial  and  monetary  conditions  in  Europe,  it  may  be  well 
to  give  a  brief  resume  of  financial  events  there  from  the  spring 
of  1877  to  the  time  of  the  passage  of  the  Bland- Allison  Act  as 
shown  by  the  weekly  market  reviews  at  London.  Early  in 
May,  1877,  the  Bank  of  England  increased  its  rate  of  dis- 
count to  3  per  cent,  because  of  the  large  withdrawals  of  gold 
for  export,  a  large  portion  of  which  was  sent  to  Germany.  It 
was  understood  that  Germany  had  about  $60,000,000  worth 
of  silver  which  it  was  anxious  to  dispose  of  as  quickly  as  prac- 


CONDITION  OF  THE  EUROPEAN  MAKKETS  193 

ticable.  That  government  had  coined  very  little  gold  for  six 
months,  but  had  kept  it  in  bars  for  greater  convenience  if 
needed  for  military  purposes,  troubles  between  Russia  and 
Turkey  threatening  the  revival  of  the  Eastern  Question.  But 
Germany  was  finding  it  somewhat  difficult  to  keep  the  gold 
acquired  by  so  great  a  sacrifice  in  the  sale  of  silver,  and  the 
Reichsbank  was  compelled  in  May  to  raise  its  rate  of  discount 
to  5  per  cent,  and  the  rate  of  interest  for  advances  to  6  per 
cent.  The  government  also  began  to  find  that  the  new  silver 
coinage,  fixed  at  ten  marks  per  capita,  might  be  insufficient  for 
some  portions  of  the  country,  especially  the  southern  portion, 
because  of  the  small  amount  of  wages  earned  by  the  people 
and  their  little  savings.  The  French  had  had  an  unexampled 
era  of  prosperity,  and  they  were  more  inclined  to  build  upon 
it  for  the  future  than  to  throw  away  its  fruits  in  war.  Eng- 
land also  was  very  desirous  of  avoiding  the  Eastern  Question  if 
possible.  During  this  month  considerable  gold  was  imported 
from  the  United  States,  but  it  went  to  Germany  and  to  France, 
which  was  preparing  for  the  complete  resumption  of  specie 
payments.  The  price  of  silver  ruled  at  54  pence  in  London, 
and  was  flat  at  that. 

In  June  the  Indian  government  sought  a  loan  in  England 
of  about  $10,000,000  at  4  per  cent.,  Lord  Hamilton  ex- 
plaining in  Parliament  that  it  was  required  to  meet  a  deficit 
caused  by  the  famine  and  the  depreciation  of  silver.  Russia 
was  also  trying  to  negotiate  a  loan  in  Paris  and  Berlin  for  $60,- 
000,000  at  5  per  cent.,  the  issue  price  of  the  bonds  to  be  70 
per  cent,  of  the  principal,  with  a  liberal  allowance  to  a  syndi- 
cate for  placing  them.  She  had  already  made  a  forced  loan 
at  home  of  about  200,000,000  roubles.  Her  finances  were  in 
a  bad  condition  for  war,  and  very  little  could  be  learned  about 
them.  Germany  resumed  her  gold  coinage  during  this  month 
at  the  rate  of  about.  $700,000  per  week,  and  the  bank  re- 
duced its  rate  to  4  per  cent.,  having  a  stock  of  about  $140,000,- 
13 


194  AWAKENING  IN  THE  UNITED  STATES 

000  in  coin  and  bullion.  The  government  offered  a  4-per- 
cent, loan  at  the  low  price  of  94. 

During  the  first  half  of  July  the  demand  for  gold  relaxed 
somewhat.  The  Bank  of  England  reduced  its  rate  to  2^  and 
then  to  2  per  cent. 

A  large  amount  of  gold  arrived  from  Australia,  and  the 
demands  from  famine-stricken  India  stiffened  the  price  of 
silver.  Germany  quickly  availed  herself  of  this  situation, 
selling  silver  at  54  pence  and  withdrawing  gold  from  London. 
In  nine  days,  ending  the  28th, she  took  about  $5,000,000  worth 
of  gold  from  the  London  market.  The  movement  of  gold 
for  twelve  months  previous  (from  July,  1876,  to  July,  1877), 
at  the  principal  commercial  centres  is  well  shown  by  a  com- 
parison of  the  bank  balances,  as  follows : 

Bank    of   England,    July  26,  3876 £33.037,926 

"       25,  1877 27,029,505 


Loss £6,008,421 

Bank  of  France,  July  27,  1876 £83,508,000 

"  "  "      26,  1877 88,123,000 


Gain,         .  £4,615,000 

Imperial  Bank  of  Germany,  July  25,  1876,  .          .          .     £26,669,000 

"      26,  1877,  .  .  .        27,206,000 


Gain, £537,000 

Netherlands  Bank,   July  24,  1876 £13,437,000 

"      30,  1877 12,546,000 


Loss,          .          . £891,000 

National  Bank  of  Belgium,  July  20,  1876,  .          .          .       £5,464,000 

"      26,  1877,  .  .  .          4,187,000 


Loss, £1,277,000 

Though  Germany  had  in  the  course  of  the  twelve  months 
taken  nearly  £10,000,000  of  gold  from  the  London  mar- 
ket alone,  the  Reichsbank  had  done  little  more  than  hold  its 
own;  the  great  gainer  was  the  Bank  of  France.  All  through 
August  the  drain  of  gold  from  London  continued,  and  the  bal- 


BANK  OF  ENGLAND  SUFFERS  195 

ance  at  the  middle  of  the  month  showed  that  the  Bank  of  Eng- 
land had  lost  over  £9,000,000  as  compared  with  the  same 
date  in  1870.  In  the  latter  part  of  the  month  shipments 
of  gold  to  the  United  States  began,  and  the  Bank  of  England 
at  once  put  up  its  rate  to  3  per  cent,  and  also  increased  the  price 
of  American  eagles.  By  this  time  the  Bank  of  France  was  in 
such  a  good  condition  that  it  ceased  issuing  any  notes  of  less  de- 
nomination than  1000  francs,  which  practically  amounted  to 
a  resumption  of  specie  payments.  Up  to  this  time  Germany 
had  withdrawn  old  silver  from  circulation  to  the  amount  of 
$200,000,000. 

Early  in  September  the  Reichsbank  was  compelled  to  ad- 
vance its  rate  again  to  5  per  cent,  to  keep  its  gold,  a  large 
amount  of  that  which  it  had  been  taking  away  from  London 
having  found  its  way  to  France,  whose  bank  seemed  to  gather 
it  in  easily,  and  hold  it  without  raising  its  low  discount  rate. 

The  fact  was  anything  but  pleasing  to  Germany,  which 
could  obtain  gold  only  by  selling  its  silver  at  a  low  price,  and 
then  only  to  see  it  withdraw  to  the  country  she  had  left  ap- 
parently prostrate  six  years  before.  But  the  price  of  silver 
being  firmer  than  for  some  time,  she  continued  to  dispose  of 
her  stock  and  draw  on  London  for  gold. 

Early  in  October  the  Bank  of  England  advanced  its  rate  to 
4  and  soon  after  to  5  per  cent.  As  trade  was  dull  and  money 
abundant,  such  a  high  rate  of  discount  threw  the  market  into 
great  confusion,  and  placed  the  other  banks  in  a  difficult  posi- 
tion; but  the  drain  of  gold  was  considered  serious,  and  it  was 
reported  that  any  large  withdrawal  of  the  metal  for  the  United 
States  would  lead  to  a  fi-per-cent.  rate.  It  looked  then  as  if 
large  shipments  to  the  United  States  could  not  be  avoided,  for 
the  European  crops  were  short,  and  the  balance  of  trade  was 
greatly  in  favor  of  America. 

But  in  November  the  situation  was  relieved.  As  soon 
as  the  Bland  Free  Coinage  Bill  was  introduced,  Germany  with- 


196  AWAKENING  IN  THE  UNITED  STATES 

held  sales  of  silver,  and  so  could  take  no  gold  from  London, 
which  was  reinforced  by  large  shipments  from  Australia  and 
India.  The  Bank  of  England  reduced  its  rate  to  4  per  cent. 
It  was  the  general  understanding  in  the  market  that  the  man- 
agers of  the  German  financial  affairs  were  holding  off  in  the 
hope  of  a  better  market  and  better  prices  for  silver  in  America 
through  our  legislation,  and  it  was  openly  stated  in  France  that 
silver  legislation  in  the  United  States  would  afford  the  gov- 
ernment an  opportunity  to  go  to  the  gold  standard.  France  had 
coined  but  a  small  portion  of  the  amount  allotted  to  it  by  the 
last  arrangement  of  the  Latin  Union,  and  still  the  country  was 
flooded  with  silver. 

By  January  1,  1878,  the  fear  of  an  immediate  gold  famine 
had  passed.  English  investors  had  dropped  our  bonds,  old  and 
new,  when  the  passage  of  the  silver  bill  seemed  assured,  and, 
being  sent  to  this  side,  they  absorbed  our  balance  of  trade.  In 
other  words,  but  for  the  silver  bill  we  should  have  compelled 
England  to  have  paid  in  gold  for  the  cereals  she  had  bought, 
an  operation  which  would  not  only  have  facilitated  our  re- 
sumption, and  very  likely  have  made  unnecessary  the  last  issue 
of  4r|'s,  but  would  have  so  squeezed  the  gold  reserves  in  Europe 
as  to  have  compelled  the  governments  to  regard  a  conference 
with  favor ;  as  it  was,  England  paid  us  in  our  own  bonds,  which 
at  considerable  expense  had  been  negotiated  abroad.  The  Ger- 
man holders  of  our  securities  were  reassured  by  the  press  of 
the  country,  which  pointed  out  that  the  possible  loss  on  them 
from  such  a  measure  as  the  Bland  Bill  could  not  be  much 
greater  than  2  per  cent.,  or  the  cost  of  exporting  silver  to 
America  and  there  having  it  recoined  and  exchanged  for 
gold.  "  This  further  contingency  is  to  be  considered,"  said 
the  Frankfurter  Handelsblatt  —  "  that  possibly  the  United 
States  may  in  time  possess  no  gold  coin,  on  account  of  its  con- 
tinued exchange  for  silver,  and  that  practically  a  single  sil- 
ver standard  would  be  introduced  in  place  of  a  double  stand- 


SILVER  COINAGE  SUSPENDED  IN  FRANCE  197 

ard.  But  such  an  event  could  scarcely  happen  for  a  year,  at 
any  rate,  after  the  double  standard  should  be  established." 
In  the  second  week  of  January  the  German  government  sent 
$10,000,000  worth  of  silver  to  London  to  be  held  to  await  the 
action  of  our  Congress.  A  London  syndicate  purchased  on 
speculation  silver  amounting  to  $2,750,000  in  expectation  of 
a  coinage  demand  from  the  United  States.  It  obtained  the 
money  to  carry  it  from  the  Bank  of  France  at  the  rate  of  1 
per  cent,  per  annum,  pledging  the  silver  as  collateral  at  80  per 
cent,  of  its  market  value. 

The  sentiment  in  favor  of  a  single  gold  standard  seemed  to 
be  growing  in  France.  In  February,  at  the  very  time  when 
our  Congress  was  engaged  in  passing  the  amended  silver  bill, 
the  French  Assembly  was  discussing  the  question  of  terminat- 
ing the  connection  of  France  with  the  Latin  Union.  The  Min- 
ister of  Finance  introduced  a  bill  (which  was  passed)  providing 
for  a  further  suspension  of  silver  coinage  for  twelve  months. 
The  possible  remonetization  of  silver  in  the  United  States 
might,  he  said,  relieve  France  of  some  of  her  difficulties  in 
maintaining  the  double  standard;  but  at  a  meeting  of  the  dele- 
gates to  the  Latin  Union  to  be  held  in  October,  the  question  of 
continuing  the  standard  would  be  discussed.  Meanwhile  he 
urged  that  the  only  sound  course  for  France  was  to  cease  coin- 
ing legal-tender  silver  altogether. 

Even  this  brief  review  of  the  monetary  conditions  in 
Europe  during  the  nine  months  preceding  the  passage  of  the 
Bland-Allison  Bill  must  convince  any  one  that  the  provision  for 
silver  coinage  first,  and  a  conference  afterwards,  was  a  serious 
blow  to  the  future  of  general  bimetallism.  England  had 
grave  doubts  concerning  the  situation  while  the  drain  on  her 
stock  of  gold  lasted.  Had  nothing  occurred  to  relieve  the 
market,  her  delegates  would  not  have  appeared  at  the  con- 
ference with  such  haughty  reserve,  and  the  attitude  of  the 
states  of  the  Latin  Union  would  have  been  different.  Europe 


198  AWAKENING  IN  THE  UNITED  STATES 

could  not  appreciate  the  feeling  of  the  American  congressmen 
—  that  something  must  be  done  at  once  to  appease  the  voters 
in  their  districts. 

But  a  harder  blow  at  bimetallism  than  the  immediate  coin- 
age of  legal-tender  silver  dollars  was  the  coinage  at  the  ratio 
of  16  to  1.  Very  little  can  be  said  of  the  sagacity  of  those 
earnest  advocates  of  the  remonetization  of  silver  who,  after 
all  the  information  obtained  by  the  commission  of  1876,  and 
after  repeated  warnings  in  the  public  prints  from  those  favora- 
ble to  bimetallism,  forced  the  government  to  coin  silver  dol- 
lars at  the  ratio  of  16  to  1,  and  then  proposed  to  ask  Europe 
to  agree  with  us.  It  was  a  ratio  that  existed  nowhere  else  in 
the  world,  and  that  Europe  could  not  adopt  without  the  ex- 
penditure of  millions.  France  alone  possessed  a  stock  of  legal- 
tender  silver  amounting  to  nearly  $500,000,000;  and  when 
to  this  was  added  the  silver  of  Italy,  Switzerland,  Belgium, 
Greece,  and  Spain,  and  the  new  German  coinage,  all  at  the 
ratio  of  15.50  to  1,  there  was  a  stock  of  silver  coin  amounting 
in  value  to  at  least  $1,000,000,000  in  Europe,  and  there  were 
not,  probably,  when  the  act  passed,  one  hundred  American 
silver  dollars  at  the  ratio  of  16  to  1  in  existence  !  Leaving  out 
of  the  question  any  financial  wisdom,  it  ought  not  to  have  re- 
quired much  of  the  ordinary  variety  to  have  suggested  the 
utter  folly  of  resuming  the  coinage  of  the  "  daddy  dollars  " 
on  a  large  scale  and  then  running  over  to  Europe  after  an 
agreement  on  a  common  ratio.  But,  strangely  enough,  the 
point  did  not  seem  to  be  sufficiently  appreciated  by  any  one  in 
Congress  save  a  few  like  Allison,  and  he  did  not  make  it  so 
serious  as  to  suggest,  unless  in  committee,  the  adoption  at  once 
of  the  French  ratio.  He  made  the  fact  that  coinage  at  the 
ratio  of  1 6  to  1  would  compel  France  either  to  close  her  mints 
or  to  take  all  our  silver  the  reason  for  a  conference,  but  he 
appeared  to  overlook  completely  the  possibility  that  France 
would,  by  keeping  her  mints  closed,  thus  make  a  conference  a 


A  BLOW  AT  BIMETALLISM  199 

waste  of  time  and  money.  If  international  bimetallism  —  or 
free  coinage  by  the  United  States  alone  —  could  have 
raised  silver  from  the  commercial  ratio  of  17.50  to  1  to  the 
ratio  of  16  to  1,  it  could  just  as  easily  have  raised  it  to 
that  of  15.50  to  1,  for,  if  a  fixed  ratio  can  be  maintained  by 
international  bimetallism  at  all,  it  is  simply  necessary  to  select 
the  most  convenient  ratio  within  the  limits  that  civilized  na- 
tions recognize. 

The  result  of  the  work  of  Congress  in  the  interests  of  silver, 
therefore,  was  to  ruin  the  prospects  of  a  conference,  and  place 
Europe  in  an  attitude  of  expectancy.  There  was  the  reasona- 
ble expectation  and  belief  abroad  that  the  silver  sentiment  here 
was  strong  enough  to  soon  overcome  the  conservatism  of  the 
Senate  and  result  in  throwing  the  mints  open  to  silver.  Be- 
sides, there  was  the  possibility  that  the  limited  purchase  of  the 
metal  by  our  government  might  raise  its  price,  thus  enabling 
Germany  to  drop  her  holdings  to  better  advantage,  and  ulti- 
mately freeing  the  Latin  Union  from  its  difficulties.  Parieu, 
who  had  become  the  leader  of  the  gold  monometallists  in 
France,  said  in  a  letter  to  the  American  Minister  at  Paris: 
"  The  progressive  and  intelligent  political  economists  of 
Europe  who  are  occupied  with  monetary  questions  will  be 
divided  between  the  desire  to  see  America,  in  the  interests  of 
general  legislation,  keep  in  the  path  of  its  legislation  of  1873, 
and  that  of  receiving  from  her  the  means  of  disburdening 
their  national  circulation  at  the  least  cost  of  the  ballast  of 
silver  which  exceeds  what  is  necessary  for  a  suitable  amount  of 
coinage."  The  statesmen  of  Europe,  for  the  sake  of  the  mone- 
tary systems  of  their  own  governments,  were  naturally  in- 
clined to  take  the  latter  view. 


CHAPTER  V 

FIKST   EFFORTS   TO   SECURE   INTERNATIONAL   BIMETALLISM  -  THE   CON- 
FERENCE  OF   1878 

IF  we  have  followed  intelligently  the  history  of  monetary 
opinion  up  to  this  point,  we  have  perceived  that  the  variations 
in  the  relative  values  of  gold  and  silver  during  the  first  half 
of  the  century,  though  slight,  together  with  the  differing 
coining  ratios  in  force,  had  resulted  quite  generally  in  an  alter- 
nating standard  of  value  in  countries  which  maintained  the 
principle  of  the  double  standard,  and  this,  in  turn,  had  fos- 
tered a  growth  of  sentiment  for  a  single  standard,  which  in 
some  countries,  notably  in  the  United  States,  had  been  ac- 
cepted in  practice,  if  not  adopted  by  law,  by  overvaluing  gold  as 
to  silver  in  the  ratio  of  coinage,  and  keeping  silver  in  circula- 
tion for  small  change  by  debasing  it.  A  fair  test  of  bimetal- 
lism could  not  be  expected  in  any  state  while  other  ratios  pre- 
vailed in  states  with  which  it  had  commercial  relations.  Under 
such  conditions,  the  great  increase  in  the  production  of  gold 
following  the  discoveries  in  California  and  Australia  tended 
inevitably  to  make  gold  the  metallic  currency  of  the  commer- 
cial world,  a  fact  which  naturally  suggested  its  general  adop- 
tion as  the  exclusive  standard  of  value.  At  the  same  time 
there  was  a  broadening  of  international  relations,  a  remarkable 
development  of  mechanical  arts,  an  improvement  in  methods 
of  transportation,  and  a  general  scientific  awakening.  Ad- 
vantages' in  international  uniformity  in  weights  and  measures 
suggested  uniformity  in  coinage  relations,  first  to  the  students 
of  political  economy,  and,  later,  through  the  ambition  of  an  em- 
peror, to  the  governments  of  commercial  nations.  Thus  the 


THE  CHANGE  IN  ECONOMIC  OPINION  201 

conference  of  18 67  met  and  mapped  out  a  plan  for  interna- 
tional coinage  upon  a  gold  basis,  naturally,  and  without  any 
serious  misgivings  as  to  the  economic  results.     Whether  the 
plan  would  have  been  carried  out  had  not  political  complica- 
tions arisen  and  disturbed  the  peace  of  Europe  it  is,  of  course, 
impossible  to  say;  we  can  only  imagine.    It  is,  at  least,  safe  to 
say  that  had  all  the  great  governments  undertaken  to  go  to 
the  gold  standard  at  once,  it  would  have  produced  a  crisis  re- 
sulting in  a  speedy  return  to  bimetallism.     The  actual  effect 
of  the  step,  as  modified  by  the  issues  of  war,  was  to  lead  na- 
tions to  seek  the  adoption  of  the  gold  standard  gradually, 
under  coinage  laws  preserving  in  each  case  the  characteristics 
of  the  national  currency,  and  ignoring  the  possible  advantages 
of  internationality.    This  course,  leading  to  an  unprecedented 
demand  for  gold  at  a  time  when  its  production  began  to  de- 
cline, and  to  a  decreased  demand  for  silver  at  a  time  when  its 
production  greatly  increased,  together  with  other  influences 
which  were  noted  in  the  last  chapter,  forced  the  two  metals 
quickly  and  widely  apart  in  their  relative  values,  and  com- 
pelled European  nations  which  had  failed  to  adopt  the  gold 
standard  to  restrict  or  stop  altogether  the  coinage  of  silver; 
while  the  United  States,  the  people  awakening  from  a  trance 
produced  by  paper  inflation,  and  discovering  that  they  had  not 
known  what  they  were  doing  when  they  cordially  acquiesced  in 
the  demonetization  of  silver — an  experience  somewhat  similar 
to  that  of  some  men  who  upon  becoming  sober  have  no  recollec- 
tion of  their  actions  while  drunk  —  resumed  the  coinage  of  the 
discarded  metal,  and  sought  for  the  international  adoption  of 
a  double  standard  in  1878,  a  standard  which  the  nations  eleven 
years  before  had  considered  an  attack  on  sound  sense  and 
logic.     There  is,  perhaps,  nothing  in  the  economic  history  of 
the  world  to  match  the  curious  shifting  of  opinion  and  action 
in  so  short  a  period. 

These  facts  have  been  briefly  restated  for  the  purpose  of 


202  THE  CONFERENCE  OF  1878 

calling  attention  to  a  remarkable  difference  in  the  two  metals 
as  the  human  mind  apparently  views  them  for  use  as  standards 
of  value.    In  1867  gold  was  plentiful,  circulated  widely,  was 
cheaper  at  the  legal  ratios  than  silver,  which  was  comparatively 
scarce  and  difficult  to  keep  in  circulation.     Gold  suggested 
itself  as  the  better  metal  for  a  standard.  The  abundance  of  gold 
was  used  as  an  argument  for  its  adoption  as  the  standard  in 
Congress  and  as  late  as  1873.    Three  years  later  gold  began  to 
be  scarce,  to  disappear  from  circulation,  to  accumulate  in  re- 
serve funds,  and  to  be  worth  more  than  silver  at  the  legal  ratios 
of  coinage,  and  silver  became  abundant  in  the  circulation  of 
bimetallic  countries.    But  silver  did  not  then  suggest  itself  as 
the  better  standard,  as  gold  had  suggested  itself  a  little  before 
under  similar  circumstances.     When  gold  was  abundant  and 
depreciated,  the  world  availed  itself  of  the  opportunity  to  adopt 
it  as  the  measure  of  values;  when  silver  became  abundant 
and  depreciated,  its  re-adoption,  even  as  a  collateral  standard 
of  values,  was  regarded  as  a  species  of  repudiation  of  obliga- 
tions.    Is  there,  then,  the  natural  tendency  with  advancing 
civilization  to  give  to  gold  a  quality  as  a  measure  of  values 
which  it  denies  to  silver,  and,  if  so,  does  it  spring  from  a 
righteous  consciousness  of  economic  fitness,  or  is  it  the  wicked 
offspring  of  selfishness,  the  despotism  of  accumulated  wealth, 
the  filching  of  the  struggling  producer?    This  question  in  its 
various  phases  occupies  a  large  space  in  the  voluminous  discus- 
sion of  the  last  twenty  years,  and  it  is  still  unsettled.     It  will 
be  our  endeavor,  however,  to  keep  as  free  as  possible  from  the 
theoretical  and  ethical  features  of  the  discussion  in  relating  the 
history  of  the  international  conferences  called  in  the  interests 
of  general  bimetallism,  and  to  develop  mainly  the  more  prac- 
tical features  of  the  efforts  to  bring  the  nations  together. 

President  Hayes  and  his  advisers  considered  the  conference 
authorized  by  the  law  of  February  28,  1878,  as  highly  desira- 
ble, not  only  for  the  opportunities  it  might  offer  in  an  inter- 


INVITATIONS  TO  THE  CONFERENCE  303 

national  way,  but  more  for  the  possible  quietus  it  might  put  on 
the  silver  agitation  at  home.  Invitations  were  soon  sent  to 
the  leading  nations,  and  they  elicited  responses  generally  fa- 
vorable. Germany  declined  the  invitation  courteously,  on  the 
ground  that,  having  recently  adopted  the  gold  standard,  her 
government  could  naturally  take  no  part  in  the  discussion  of 
the  project  of  international  bimetallism.  Possibly,  also,  it  was 
not  disposed  to  submit  to  an  examination  as  to  the  stock  of  sil- 
ver it  desired  to  work  off  on  the  market,  or  as  to  its  future 
plans.  England,  which  was  considerably  disturbed  over  the 
possible  effect  of  the  continued  decline  of  silver  upon  her  trade 
with  her  Indian  possessions,  wished  to  be  represented,  but, 
being  wedded  to  the  gold  standard,  felt  that  consistency  would 
hardly  permit  her  to  take  part  in  an  effort  to  secure  interna- 
tional bimetallism;  it  might  be  considered  an  admission  that 
the  government  was  dissatisfied  with  the  gold  standard.  So  a 
reply  was  made  to  the  American  government  to  the  effect  that, 
if  the  exclusive  object  of  the  conference  were  the  establish- 
ment of  a  fixed  relation  between  gold  and  silver,  England 
could  not  accept,  for  the  government  could  do  nothing  to  com- 
promise the  gold  standard,  to  which  it  proposed  to  adhere.  If, 
however,  the  invitation  could  be  so  widened  as  to  permit  the 
consideration  of  the  coins  of  various  countries  with  reference 
to  a  universal  currency,  the  English  government  would  send 
delegates  with  the  understanding  that  they  would  not  be  com- 
mitted by  any  conclusions  reached.  Our  government,  of 
course,  modified  the  invitations  to  catch  the  English  delegates, 
and  also  those  of  the  Scandinavian  states,  which  placed  them- 
selves in  exactly  the  same  position  England  had  taken.  The 
United  States  government  at  this  time  cared  nothing  about 
the  old  scheme  for  an  international  unit  of  money;  indeed,  it 
considered  it  as  harmful  rather  than  helpful  to  the  cause  of 
bimetallism.  John  A.  Kasson,  then  Minister  to  Austria,  wrote 
to  Secretary  Evarts  immediately  after  the  passage  of  the 


204  THE  CONFERENCE  OF  1878 

Bland- Allison  Bill,  and  urged  that  the  subject  of  an  interna- 
tional unit  be  included  in  the  invitation  for  a  conference,  if 
one  were  to  be  held,  but  the  administration  gave  the  matter 
no  quarter  till  the  English  government  made  it  an  excuse  to 
get  into  the  conference  consistently.  Kasson  was  interested  in 
the  subject  of  an  international  unit  for  itself,  having  advocated 
it  strongly  in  the  sixties,  but  it  was  used  simply  as  a  back  door 
to  the  conference  for  the  gold-standard  countries,  who  cared 
nothing  about  it,  and  did  not  even  suggest  it  in  the  conference. 

Paris  was  mentioned  by  most  of  the  governments  as  the 
most  convenient  place  for  the  meeting,  and  the  date  was  fixed 
for  August  10.  Senator  R.  E.  Eenton,  "W.  S.  Groesbeck,  and 
Francis  A.  Walker  were  appointed  delegates  for  the  United 
States,  and  S.  Dana  Horton,  who  had  written  extensively  in 
favor  of  silver,  and  was  designated  by  Congress  as  secretary 
of  the  delegation,  was  later  admitted  as  an  accredited  delegate. 
Fenton,  of  Xew  York,  had  represented  his  district  in  Con- 
gress from  1857  to  1865,  had  been  governor  of  the  state  from 
1864  to  1868,  and  in  1869  had  succeeded  ex-Governor  Morgan 
in  the  Senate,  his  term  having  expired  in  1875.  He  had  been 
a  member  of  the 'Finance  Committee  of  which  Sherman  was 
chairman  during  the  consideration  of  the  Mint  Bill,  and  was 
a  member  of  it  when  the  bill  became  the  "  Demonetization 
Act  of  1873."  Groesbeck  had  served  in  the  capacity  of  an  ex- 
pert on  the  Silver  Commission  of  1876.  General  Walker  was 
the  son  of  the  distinguished  economist,  Amasa  Walker,  had 
been  made  brevet  brigadier-general  in  the  war,  and  had  been 
chief  of  the  bureau  of  statistics  and  superintendent  of  the  cen- 
sus, and  at  this  time  was  professor  of  political  economy  and 
history  in  the  Sheffield  Scientific  School  of  Yale  College. 

The  conference  of  1878  was  less  notable  than  its  predeces- 
sor of  1867  in  the  number  of  men  of  talent  and  reputation  it 
contained.  Tn  point  of  ability  the  four  leading  figures  were 
Leon  Say  of  France,  George  J.  Goschen  of  England,  Charles 


NOTABLE  DELEGATES  PRESENT.  205 

Feer-Herzog  of  Switzerland,  and  General  Walker  of  this  coun- 
try. Say,  then  in  his  fifty-third  year,  was  the  grandson  of 
the  eminent  French  economist,  Jean  Baptiste  Say,  who  died 
in  1832.  He  made  a  special  study  of  political  economy  and  for 
a  long  time  was  editor  of  the  Journal  dcs  Dcbats.  He  had 
been  Minister  of  Finance  under  the  presidency  of  Thiers  and 
McMahon,  was  considered  an  authority  upon  economic  and 
financial  subjects,  and  had  published  many  valuable  works. 
Goschen  was  regarded  as  the  greatest  authority  in  England 
upon  English  financial  questions.  Entering  Parliament  in 
1863  as  a  Liberal,  he  at  once  took  a  prominent  part  in  affairs, 
becoming  a  member  of  Lord  Russell's  cabinet  in  1866,  and  of 
Gladstone's  in  1871.  In  1876  he  was  the  British  delegate  to 
concert  measures  with  France  for  the  conversion  of  Egyptian 
debts,  and  was  also  the  head  of  the  commission  appointed  to 
consider  the  effects  of  the  depreciation  of  silver  upon  the  Ind- 
ian currency,  the  report  of  which  has  been  alluded  to.  He 
was  the  author  of  several  works,  his  "  Theory  of  Exchanges  " 
having  been  translated  into  the  French  by  Leon  Say.  By 
the  prominent  part  Feer-Herzog,  of  Switzerland,  had  taken  in 
the  formation  of  the  Latin  Union  in  1865,  in  the  conference 
of  1867,  and  by  his  published  essays,  Europe  had  come  to  rec- 
ognize him  as  one  of  its  leading  authorities  on  monetary  mat- 
ters, and  the  most  conspicuous  advocate  of  the  single  gold 
standard. 

The  following  is  a  list  of  the  countries  responding  to  the 
invitation  of  this  government  and  their  representatives : 

A  ustria-Hungary  : 

Count  Von  Kuefstein,  Charge  d'Affairs  of  Austria-Hungary 

at  Paris. 

C.  Von  Hengelmiiller.  First  Secretary  of  the  Legation  at  Paris. 
Belgium: 

Eudore  Pirrnez.  ex-Minister  of  the  Interior,  member  of  the 
Chamber  of  Representatives;  one  of  the  Belgian  Monetary 
Commission  of  1873. 
Charles  August  Gamier,  Councillor  of  Legation  at  Paris. 


206  THE  CONFERENCE  OF  1878 

France: 

L<5on  Say. 

Charles  Jiigerschmidt,   Minister  Plenipotentiary  in  the  De- 
partment of  Foreign  Affairs. 

Jean  Louis  Andr6  Kuan.  Director  of  the  Administration  of 
Coins  and  Metals  under  the  Empire  and  under  the  Republic. 
Great  Britain: 

George  J.  Goschen. 

Henry   Hucks   Gibbs,   ex-Governor  and   a   Director  of   the 

Bank  of  England. 

Sir  Thomas  L.  Seccombe,  Financial  Secretary  of  the  Secre- 
tary of  State  for  India  in  Council. 

William  Brampton  Gurdon,  officer  in  the  Treasury  Depart- 
ment. 
Greece: 

Nicholas  P.  Delyanni,  Charge  d' Affairs  of  Greece  at  Paris. 
Italy: 

Count  Charles  Rusconi,  formerly  Minister  of  Foreign  Affairs. 
Commander  Cesar  Baralis,  Director  of  the  Mint  of  Milan. 
Chevalier  Constantin  Ressmann,  First  Secretary  of  the  Italian 

Legation  at  Paris. 
The  Netherlands: 

A.  Vrolik,  ex-Minister  of  Finance. 

W.  C.  Mees,  President  of  the  Bank  of  the  Netherlands. 
Russia : 

T.  de  Thoerner,  Privy  Councillor  and  member  of  the  Council 

of  the  Minister  of  Finance. 
Siceden: 

C.  Fr.  Waern,  ex-Minister  of  Finance. 
Norway: 

Dr.  O.  J.    Broch,    ex-Minister  of    Marine    and    Postmaster- 
General. 
Switzerland: 

Charles  Feer-Herzog. 

Charles  E.  Lardy,  Councillor  of  the  Swiss  Legation  at  Paris. 

Only  four  of  these  had  been  members  of  the  conference  of 
1867  —  Feer-Herzog  of  Switzerland,  Broch  of  Norway,  and 
Mees  and  Vrolik  of  the  Netherlands.  The  first  two  remained 
stanch  gold  monometallists,  the  other  two  had  become  ad- 
vocates of  the  double  standard.  Mees,  it  will  be  remembered, 
while  advocating  a  single  standard  of  one  or  the  other  metals 
in  1867,  considered  it  unwise  for  all  countries  to  adopt  the 
same  metal.  Vrolik  was  detained  by  sickness  and  unable  to 
participate  in  the  conference,  but  his  position  was  well  known, 
being  president  of  the  Society  of  the  Netherlands  for  the  Pro- 
motion of  Industry,  which,  in  1876,  memorialized  the  king 
in  favor  of  international  bimetallism. 


THE  OBJECT  OF  THE  CONFERENCE  207 

The  conference  did  little  except  to  organize  at  its  first  meet- 
ing, August  10,  at  the  Department  of  Foreign  Affairs.  Say 
was  chosen  president  and  Fenton  vice-president.  The  former 
in  his  opening  remarks  explained  the  reasons  inducing  the 
Latin  Union  to  restrict  its  silver  coinage,  and  then  to  suspend  it 
entirely.  The  adoption  of  the  gold  standard  by  Germany  and 
the  increase  of  the  production  of  silver  by  the  United  States 
had  compelled  it  to  protect  itself,  he  said,  but  it  still  remained 
in  "  an  expectant  attitude."  "  In  the  meantime,"  he  con- 
tinued, "  the  United  States  of  America  have  adopted  the  policy 
of  returning  to  the  system  of  the  double  standard,  adopting  also, 
as  in  the  past,  their  ratio  of  1  to  16  instead  of  1  to  15.50,  which 
is  the  relation  of  the  two  metals  in  the  Latin  Union."  This 
was  a  broad  hint  of  the  difficulties  Congress  had  thrown  in 
the  way  of  its  own  desires,  or,  at  least,  in  the  way  of  the  only 
bimetallism  possible,  by  adopting  the  old  ratio.  The  United 
States  delegates  were  then  called  upon  to  make  known  the  in- 
tentions and  views  of  their  government,  and  in  response  Fen- 
ton  said  that,  as  some  of  the  delegates,  notably  those  of  Great 
Britain,  had  not  arrived,  he  preferred  to  say  little  at  the  first 
meeting  except  in  acknowledgment  of  the  responses  to  the  in- 
vitation of  his  government.  "  Without  anticipating  your  dis- 
cussion," he  remarked,  "  it  is  but  an  expression  of  the  distinct 
object  of  the  conference  as  indicated  by  the  law  under  which 
the  representatives  of  the  United  States  are  commissioned  to 
meet  you,  that  we  will  be  able  to  agree  upon  a  common  ratio 
between  gold  and  silver  for  the  purpose  of  establishing,  inter- 
nationally, the  use  of  bimetallic  money,  and  securing  fixity  of 
relative  value  between  the  two  metals.  The  specific  means  of 
attaining  this  object  we  trust  will  soon  be  developed  in  the 
discussion  and  comparison  of  views  which  is  to  follow." 

At  the  next  meeting,  six  days  later,  the  English  delegates 
appeared.  Meanwhile  the  American  delegates  had  decided  to 
have  Groesbeck  develop  the  views  of  their  government  and 


208  THE  CONFERENCE  OF   1878 

formulate  the  questions  upon  which  the  conference  might  be 
called  upon  to  pronounce  itself.  The  small  consideration  given 
to  the  matter  of  the  international  uniformity  of  coinage,  which 
alone  was  supposed  to  have  led  the  English  and  Scandinavian 
delegates  to  attend,  may  be  judged  from  Groesbeck's  opening 
remark.  "  The  object  of  the  conference,"  he  said,  "  is  to  re- 
store silver  to  its  former  position ;  to  equalize  gold  and  silver 
upon  a  ratio  to  be  fixed  by  agreement.  This  is  the  principal 
object  of  the  conference.  I  desire  to  say,  however,  in  addition, 
speaking  in  the  name  of  my  colleagues,  that  we  shall  be  happy 
to  come  to  an  understanding  with  the  delegates  of  Sweden 
and  Norway,  and  of  all  other  states  interested  in  the  establish- 
ment of  a  coin  of  universal  circulation."  The  delegates  of 
the  United  States,  he  explained,  had  no  more  power  to  bind 
their  government  than  the  delegates  of  other  states,  and  he 
assured  the  conference  that  this  country  would  be  upon  a 
specie-paying  basis  the  first  of  the  following  January,  and, 
therefore,  able  to  take  its  full  share  in  executing  any  engage- 
ments entered  into.  In  the  effort  to  destroy  the  impression, 
which  had  prevailed  extensively  in  Europe,  that  this  country 
was  taking  the  initiative  in  the  conference  because  it  pro- 
duced silver,  he  argued  that  his  government  had  no  interest 
in  either  silver  or  gold  mines,  that  the  production  of  silver  was 
greatly  exaggerated,  and  that  indications  pointed  to  its  de- 
crease. He  reviewed  the  history  of  the  coinage  legislation  of 
the  United  States,  to  show  that  the  government  was  returning 
to  an  old  system,  and  was  not  actuated  by  selfish  motives.  Com- 
ing down  to  the  act  of  1873,  he  said,  "  Silver  was  made  to  dis- 
appear through  inadvertence  rather  than  intentionally,  by  an 
omission  to  say  anything  about  it.  As  a  matter  of  fact,  the  sil- 
ver standard  was  found  to  have  been  suppressed.  The  example 
of  Germany  had  proved  contagious;  no  newspaper  had  dis- 
cussed the  question;  public  opinion,  by  no  means  enlightened, 
was,  so  to  speak,  taken  unawares,  and  great  surprise  was  felt 


PROPOSITIONS  OP  THE  UNITED  STATES  209 

when,  a  short  time  after  the  law  was  passed,  the  change  was 
fully  perceived.  In  1878,  the  legislator,  better  advised,  de- 
sired to  re-establish  the  traditional  system.  If,  contrary  to 
our  intention,  which  was  to  treat  the  two  metals  on  the  foot- 
ing of  perfect  equality,  we  have  nevertheless  limited  the  coin- 
age of  silver,  this  was  on  our  side  a  mere  measure  of  precau- 
tion, adopted  provisionally  on  account  of  the  condition  of  the 
market  of  the  metals  in  Europe,  and  by  the  measures  taken  by 
the  states  of  the  Latin  Union."  With  a  view  to  securing  free- 
dom of  silver  coinage  in  the  future,  they  had  sought  a  con- 
ference, and  he  then  proposed  that  it  pronounce  itself  upon  the 
two  following  propositions : 

"  I.  It  is  the  opinion  of  this  assembly  that  it  is  not  to  be  desired 
that  silver  should  be  excluded  from  free  coinage  in  Europe  and  the 
United  States  of  America.  On  the  contrary,  the  assembly  believe 
that  it  is  desirable  that  the  unrestricted  coinage  of  silver  and  its 
use  as  money  of  unlimited  legal  tender  should  be  retained  where 
they  exist,  and  as  far  as  practicable,  restored  where  they  have 
ceased  to  exist. 

"  II.  The  use  of  both  gold  and  silver  as  unlimited  legal  tender 
may  be  safely  adopted;  first,  by  equalizing  them  at  a  relation  to  be 
fixed  by  international  agreement;  and,  secondly,  by  granting  to  each 
metal,  at  the  relation  fixed,  equal  terms  of  coinage,  making  no  dis- 
crimination between  them." 

A  third  proposition  had  been  prepared,  and  was  held  in  re- 
serve in  anticipation  of  a  favorable  moment  to  introduce  it,  a 
moment  which  never  came.  It  was  this : 

"  III.  The  delegations  here  present  agree  to  recommend  to  their 
respective  governments  that,  by  the  free  coinage  of  silver  at  a  re- 
lation to  be  agreed  upon,  or,  provisionally,  through  extended  coinage 
upon  government  account  and  the  accumulation  of  silver  bullion  in 
public  treasuries,  they  make  a  concerted  effort  to  restore  silver  to  its 
function  of  money  of  full  power." 

The  omission  to  frame  any  proposition  touching  the  matter 
of  an  international  unit  was,  of  course,  to  be  expected.  ~No 
one  cared  for  it,  and  it  was  not  considered  necessary  to  allow 
it  even  the  scant  distinction  of  occupying  a  place  among  the 
propositions  in  reserve,  but  never  to  be  called  for.  Thus  com- 
pletely had  a  human  ideal  vanished. 
14 


210  THE  CONFERENCE  OF  1878 

The  American  delegates,  judging  from  Groesbeck's  re- 
marks, assumed  that  the  Europeans  possessed  a  limited  knowl- 
edge of  the  course  of  monetary  events  in  the  United  States 
following  1867;  and  they  may  even  have  come  to  believe  that 
silver  was  dropped  in  1873  through  an  "  inadvertence."  As 
a  rule,  the  political  conditions  and  events  of  this  country  are 
little  understood  abroad.  But  the  men  who  listened  to  Groes- 
beck  —  it  may  be  humiliating  to  confess,  but  it  is  true  —  had 
watched  monetary  changes  in  America  more  closely,  or,  at 
least,  more  intelligently,  than  the  Americans  themselves.  They 
knew,  in  1873,  that  silver  was  dropped  by  law  in  this  coun- 
try at  that  time,  had  written  about  it,  some  of  them  had  even 
advised  members  of  Congress  against  the  step,  and  they  had 
naturally  assumed  that  Congress  knew  exactly  what  it  was 
doing,  and  acted  in  furtherance  of  the  policy  advocated  by  the 
United  States  and  adopted  at  the  conference  of  1867.  They 
had  read  the  reports  of  the  Treasury  and  mint  officials  from 
1870  to  1872,  calling  attention  to  the  proposed  discontinuance 
of  the  silver  dollar,  and  they  could  not  understand  how  the 
members  of  Congress,  to  whom  the  reports  were  made,  had 
failed  to  read  and  consider  them.  As  soon  as  Groesbeck  sat 
down,  therefore,  Goschen  expressed  a  desire  to  know  what  sig- 
nificance was  to  be  attached  to  the  word  "  inadvertence." 
Groesbeck  replied  that  the  American  people  had  never  been 
asked  whether  they  wished  silver  to  remain  a  legal  tender,  that 
no  newspaper  had  called  attention  to  it,  that  no  commercial 
body  had  considered  or  recommended  it,  and  that  many  mem- 
bers of  Congress  had  since  confessed  that  at  the  time  the  de- 
cision was  made  they  knew  not  what  they  were  doing. 

This  brought  Feer-IIerzog  to  his  feet  with  copies  of  Ameri- 
can documents  from  1870  to  1873,  specifically  and  plainly  call- 
ing the  attention  of  Congress  to  the  proposed  discontinuance  of 
the  silver  dollar  as  a  standard.  It  appeared,  he  said,  that  the 
step  was  voluntarily  and  with  reflection  determined  upon.  He 


THE  ALLEGED  INADVERTENCE  OF  1873   .  211 

could  not  believe  that  Congress  was  generally  informed  only 
upon  those  events  or  propositions  which  were  explained  in  the 
newspapers,  and,  if  the  people  had  not  been  informed,  Con- 
gress, which  represented  them,  must,  or  should  have  known. 
There  was  no  plebiscite  in  the  United  States.  Moreover,  he 
failed  to  see  how  the  alleged  subsequent  surprise  of  the  people 
was  admissible,  as  the  law  of  1873  had  brought  about  no 
change  in  the  currency,  silver  having  long  before  ceased  to 
be  money  in  circulation. 

General  Walker  hardly  succeeded  in  removing  the  un- 
pleasant features  of  this  courteous  reflection  upon  the  delibera- 
tions of  Congress,  by  explaining  that  the  change  was  even  un- 
known to  men  in  the  United  States  specially  occupied  with 
financial  and  monetary  subjects,  for  he  himself  had  to  confess 
that,  though  at  the  time  lecturing  on  money  and  occupying 
a  chair  of  political  economy,  he  was  not  aware  of  what  was 
being  done.  The  European  delegates  were  charitable  enough 
to  press  the  subject  no  further,  though,  had  they  been  cruelly 
inclined,  they  might  have  asked  ex-Senator  Fenton,  who  was 
a  member  of  the  Finance  Committee  which  was  supposed  to 
have  surreptitiously  dropped  the  dollar  finally,  and  who  had 
advocated  the  substitution  of  the  trade  dollar,  if  he  also  was 
unaware  of  the  nature  of  the  act. 

President  Say  took  exception  to  Groesbeck's  remark  that 
the  action  of  the  Latin  Union  had  supplied  a  motive  for  the 
restriction  of  silver  coinage  in  the  Bland-Allison  Act.  The 
statement  could  not,  he  thought,  be  well  founded  in  fact,  for 
the  limit  was  fixed  by  an  amendment  to  the  original  bill,  which 
was  for  free  coinage.  "  The  influence  of  the  Latin  Union," 
he  added,  significantly,  "  seemed  to  have  counted  for  so  little 
in  the  resolutions  adopted  by  Congress  on  this  occasion  that 
it  does  not  appear  that  there  was,  even  for  a  moment,  any 
question  of  conforming  the  American  system  to  that  of  the 
Latin  Union  by  adopting  the  relation  of  1  to  15.50."  Groes- 


212  THE  CONFERENCE  OF  1878 

beck  replied  that,  while  the  sentiment  of  the  people  of  the 
United  States  was  unequivocally  in  favor  of  free  coinage,  it 
had  appeared  to  Congress  on  reflection  that  it  would  be  dan- 
gerous for  a  state  to  act  alone.  Dana  Horton  added  that  the 
whole  question  had  been  thoroughly  discussed  in  the  United 
States,  that  the  situation  of  the  Latin  Union  had  not  been  lost 
sight  of,  and  that  the  Silver  Commission  had  advised  the  adop- 
tion of  the  ratio  of  1  to  15.50.  He  did  not  explain  why  Con- 
gress had  not  taken  the  advice.  This  ended  the  preliminary 
discussion,  and  the  conference  turned  its  attention  to  the  prop- 
ositions submitted  in  behalf  of  the  United  States. 

The  position  of  France,  as  stated  by  Say,  was  in  effect 
this: 

Having  the  double  standard  in  theory,  it  had  it  not  in 
practice,  for  the  privilege  formerly  enjoyed  by  private  per- 
sons of  having  their  silver  coined  at  the  mints  had  been  with- 
drawn. In  taking  this  step,  the  government  had  declared  cate- 
gorically that  it  was  not  moving  towards  a  gold  standard,  but 
was  in  a  condition  of  expectancy  from  which  it  should  not 
move  except  for  good  reasons,  when  they  appeared,  and  then, 
probably,  to  re-enter  into  the  system  of  the  double  standard. 
Placed  in  the  centre  of  the  Latin  Union,  France  had  collected 
a  great  quantity  of  silver  —  about  900,000,000  francs  in  the 
Bank  of  France,  and  about  1,500,000,000  francs  outside.  It 
certainly  would  not  do,  said  Say,  to  withdraw  a  legal-tender 
power  from  such  a  mass  of  silver  and  throw  it  on  the  metal 
market  as  mere  merchandise.  Such  an  idea  was  inadmissible. 
But  France  could  not  change  its  attitude  of  expectancy  so  long- 
as  the  fall  of  silver  should  not  be  accurately  recognized  and 
measured,  and,  notably,  till  Germany  should  have  completed 
the  sale  of  its  stock.  Whatever  that  stock  might  be,  so  long  as 
it  remained  the  market  would  be  troubled  and  uncertain.  This 
might  take  place  within  two  or  three  years;  it  was,  he  said,  the 
dark  side  of  the  question  that  deprived  France  of  her  freedom 


FIIANCE  IN  AN  EXPECTANT  ATTITUDE  213 

of  action.  The  propositions  of  the  United  States,  therefore, 
seemed  premature  to  France,  which  could  not  find  a  way  to  ac- 
cept them  then,  but  was  unwilling  to  have  this  lack  of  assent 
considered  as  a  condemnation  of  the  bimetallic  system.  As 
there  was  reason  to  believe  that  less  than  a  majority  of  the 
conference  could  pronounce  in  favor  of  the  propositions  of  the 
United  States,  it  would  be  better  for  the  conference  to  ab- 
stain from  making  a  formal  answer  to  the  questions  put  to  it. 
Better  results,  he  thought,  might  follow  if  the  states  repre- 
sented at  the  meeting  should  simply  agree  upon  the  expres- 
sion of  a  common  idea  as  to  the  employment  of  silver  as  money, 
and  should  invite  each  other,  reciprocally,  to  take  no  measures 
in  their  domestic  legislation  of  a  nature  to  contribute  to  the 
depreciation  of  silver.  To  the  first  paragraph  of  the  proposi- 
tion —  that  "  it  is  the  opinion  of  the  assembly  that  it  is  not  to 
be  desired  that  silver  should  be  excluded  from  free  coinage  in 
Europe  and  the  United  States "  —France  would  willingly 
give  assent,  although  for  the  moment  it  could  not  return  to 
free  coinage,  and  could  not  yet  discover  the  reasons  which, 
perhaps,  it  might  some  day  have  for  re-establishing  it.  As  to 
the  second  paragraph  —  "  on  the  contrary  the  assembly  be- 
lieve that  it  is  desirable  that  the  unrestricted  coinage  of  silver 
and  its  use  as  money  of  unlimited  legal  tender  should  be  re- 
tained where  they  exist,  and,  as  far  as  practicable,  restored 
where  they  have  ceased  to  exist "  -  France  thought  that  sil- 
ver ought  to  maintain  the  character  of  legal  money  where  it 
possessed  it,  but  it  could  not  assert  that  it  would  be  proper 
to  give  it  that  character  everywhere  where  it  did  not  possess 
it.  As  to  safely  adopting  the  use  of  both  gold  and  silver  as 
unlimited  legal  tender  by  equalizing  them  at  a  relation  to  be 
fixed  by  international  agreement,  France  could  not  say  in 
advance  that  there  would  be  such  a  proportion  between  the 
future  production  of  silver  in  the  mines  and  the  regular  and 
constant  demand  of  Asiatic  commerce  that  the  legal  relation 


214  THE  CONFERENCE  OF  1878 

would  never  come  to  be  altered;  it  would  be  especially  difficult 
for  France  to  assert  the  maintenance  of  this  equilibrium  when 
it  knew  that  in  a  moment  Germany  could  throw  upon  the 
metal  market  the  mass  of  silver  the  government  had  in  hand. 
The  only  certain  thing  about  silver,  said  Say,  in  conclusion, 
was  that  its  circulation  did  not  proceed  regularly,  was  un- 
settled, and  made  sickly  by  the  instability  of  ratio.  It  was  not, 
therefore,  a  final,  absolute  refusal  which  France  opposed  to 
the  project  of  the  United  States.  The  question  might  one 
day  be  answered. 

Say's  statement  showed  that  nothing  could  be  expected 
from  France  while  Germany  held  off.  Count  Rusconi,  of  Italy, 
thought  it  would  be  highly  desirable  to  have  Germany  repre- 
sented, and  Goschen  observed  that  Germany  might  possibly 
consent  to  send  delegates,  under  the  same  conditions  and  reser- 
vations the  English  government  had  stipulated  —  that  is,  in 
expressing  the  resolution  to  remain  firmly  attached  to  the  gold 
standard.  It  was  decided  to  have  the  president  transmit  to 
the  German  government  a  copy  of  the  minutes  containing  this 
expression  of  the  desire  of  the  conference  to  have  Germany 
represented.  Shortly  afterwards  he  received  a.  letter  from 
the  German  Minister  at  Paris,  stating  that  his  government, 
while  expressing  its  thanks  for  the  invitation,  regretted  its  in- 
ability to  accede  to  the  wish  of  the  conference.  So  from  this 
point  the  mission  of  the  United  States  became  hopeless. 

The  response  of  some  of  the  other  states  of  the  Latin  Union 
was  decidedly  less  favorable  than  that  of  France,  and  it  is  not 
improbable  that  France  would  have  taken  a  decided  stand  for 
the  gold  standard  at  this  time  had  it  not  been  for  the  mass 
of  silver  in  its  currency  and  reserves.  To  have  adopted  the 
gold  standard  unreservedly  under  such  conditions  would  have 
depreciated  the  currency  in  the  hands  of  the  people,  and  forced 
a  loss  on  the  Bank  of  France  which  would  have  nearly  wiped 
out  its  capital.  The  position  of  Belgium  and  Switzerland  was 


BELGIUM'S  HOSTILITY  TO  BIMETALLISM  215 

less  complicated,  much  of  their  silver  having  passed   into 
French  hands. 

Speaking  for  the  former,  Pirmez  said  that  the  propositions 
of  the  United  States,  taken  together,  amounted  to  saying  that 
it  was  advantageous  to  employ  gold  and  silver  as  money  simul- 
taneously everywhere,  and  with  equal  freedom  of  coinage.  It 
was  the  system  of  the  double  standard  to  its  full  extent,  and 
Belgium  could  not  do  otherwise  than  reject  such  a  proposi- 
tion. The  double  standard,  he  maintained,  had  the  effect  of 
organizing  monetary  crises,  and,  at  that  moment,  the  removal 
of  the  restrictions  in  the  Latin  Union  would  have  the  imme- 
diate result  of  giving  enormous  profits  to  speculators  in  the 
metals  by  enabling  them  to  withdraw  gold  and  replace  it  with 
silver.  He  admitted  the  gravity  of  the  situation.  Xever  could 
more  exceptional  circumstances  have  justified  a  conference, 
but,  by  a  remarkable  coincidence,  he  said,  the  extraordinary 
situation,  which  so  well  explained  the  meeting,  seemed  des- 
tined to  render  it  without  result,  for  the  force  of  the  economic 
facts,  against  which  they  were  invited  to  struggle,  defied  every 
effort.  It  had  been  admitted  in  the  discussion  that  no  serious 
result  could  be  obtained  unless  all  the  governments  of  the 
world  adopted  simultaneously  an  identical  relation  between 
gold  and  silver,  for  otherwise  the  depreciated  metal  would  ac- 
cumulate in  the  states  bound  to  receive  it,  and  attributing  to 
it  a  fictitious  value.  The  countries  bound  by  agreement  would 
become  a  field  for  speculation  for  those  countries  not  bound 
by  it.  By  adopting  such  a  measure,  he  continued,  Germany 
would  have  little  desire  to  attend  congresses,  for  she  would 
find  her  affairs  managed  better  in  her  absence  than  she  could 
have  ventured  to  demand  if  present.  He  saw  no  chance  of 
unanimity;  the  two  largest  empires  of  the  world  would  not 
bind  themselves,  and  in  what  proportions  and  with  what 
profits  would  they  not  exert  their  power  over  the  countries 
which  should  be  given  up  to  their  mercy  —  garroted  by  the  in- 


216  THE  CONFERENCE  OF  18T8 

variability  of  the  ratio  ?  The  American  delegates  had  said 
that  their  proposition  was  only  a  wish,  a  request  to  express  the 
idea  that  the  realization  of  a  general  understanding  would  be 
advantageous;  if  impossible,  it  would  not  be  done,  but  they 
would  at  least  have  indicated  the  end  to  be  aimed  at.  "  We  are 
thus,"  said  the  Belgian  delegate,  ''very  nearly  in  the  position  of 
people  who  see  an  extraordinary  bird  soaring  over  their  heads, 
but  at  such  a  height  that  their  weapons  cannot  reach  it.  A 
question  arises.  'It  is  not  within  range,'  say  some,  'let  us  not 
trouble  ourselves  about  it.'  '  Let  us  at  least  decide,'  say  others, 
*  that  we  should  like  to  be  able  to  bring  it  down.'  So  in  this 
conference,"  continued  Pirmez,  "  the  choice  must  be  between 
those  who  keep  to  the  practical  view,  and  those  who  demand 
the  declaration  of  a  platonic  desire."  Belgium  would  favor 
the  former.  Governments  should  pronounce  only  upon  what 
they  could  convert  into  fact.  He  went  further,  and  denied 
that  the  realization  of  an  unanimous  agreement  of  the  world 
would  produce  the  happy  results  expected  from  it.  It  was  ex- 
pected to  acquire  a  monetary  calm  by  letting  loose  the  most  vio- 
lent tempest  —  by  fixing  a  value  on  all  the  silver  in  the  world 
higher  than  commerce  would  give  it,  when  governments  could 
not  call  value  into  existence.  He  admitted  that  a  legal  fixing 
of  the  ratio  between  gold  and  silver  might  give  to  the  latter 
a  value  superior  to  its  real  value,  but  claimed  that  that  value 
would  be  taken  from  gold.  The  sum  of  the  two  values  would 
remain  the  same,  the  dynamics  of  values  not  differing  from 
the  dynamics  of  bodies.  Two  bodies  endowed  with  dif- 
ferent motions  might  be  coupled  together,  and  made  to  assume 
the  same  motion,  and  those  who  looked  only  at  the  body  that 
had  moved  the  more  slowly  might  think  there  was  a  gain,  but, 
on  looking  at  both,  it  would  be  found  that  what  one  had  gained 
the  other  had  lost.  If  England  should  make  the  Indian  rupees 
legal  tender  at  home  at  15.50  to  1,  he  said  by  way  of  illustra- 
tion, they  would  rise,  and  the  exchange  of  London  on  Calcutta 


THE  DOUBLE  STANDARD  REGARDED  AS  A  SCIENTIFIC  IMPOSSIBILITY  217 

would  approach  par,  but  England  would  be  paying  for  a  vain 
appearance,  for  what  the  rupee  gained  the  sovereign  would 
lose.  Even  if  the  metals  were  linked  together  the  link  would 
be  of  rubber,  allowing  sufficient  play  to  break  the  dreamed- 
of  harmony.  He  doubted  if  the  metals  would  have  the  same 
value  in  different  countries.  Gold  would  disappear  from  coun- 
tries where  silver  was  most  plentiful,  especially  the  silver-pro- 
ducing countries.  Speculation  would  withdraw  gold  from  the 
places  where  it  was  worth  most,  and  a  fixed  par  of  exchange 
could  not  be  maintained.  He  agreed  that  the  substitution  of 
silver  for  gold  might  be  a  long  operation,  but,  if  the  ratio 
should  be  commercially  false  —  and  it  would  be  false,  for  it 
was  this  very  falsity  which  was  to  rehabilitate  one  of  the 
metals  —  gold  would  gradually  withdraw  from  circulation, 
finding  greater  use  in  industrial  and  artistic  consumption, 
sought  for  by  those  who  hoarded,  and  eventually  bringing  a 
premium.  This  grand  alliance  of  nations,  then,  after  casting 
monetary  relations  into  an  unprecedented  crisis,  would  lead 
only  to  complete  defeat.  He  adduced  many  other  arguments 
against  the  double  standard,  and  his  colleague,  Gamier,  en- 
dorsed his  statements. 

Belgium,  like  Switzerland,  had  been  steadfast  in  its  belief 
in  the  gold  standard  for  twenty  years,  and  it  was  not  to  be 
expected  that  the  American  propositions  would  find  favor  in 
that  quarter.  But  safety  required  the  Belgian  government  to 
adhere  to  the  Latin  Union,  and,  if  France  would  have  con- 
sented to  bimetallism  without  restrictions,  it  would  have  made 
little  difference  what  the  Belgian  delegates  thought.  As  it  was, 
these  two  states  of  the  Latin  LTnion,  Belgium  and  Switzerland, 
were  the  strongest  advocates  of  gold  monometallism  in  the 
conference.  Feer-Herzog  had  been  its  chief  spokesman  in  mon- 
etary conferences  and  out  for  a  dozen  years.  He  devoted  very 
little  time  to  defining  his  position  as  a  representative  of  Switzer- 
land with  reference  to  the  American  propositions,  but  he  con- 


218  THE  CONFERENCE  OF  1878 

stantly  took  part  in  the  discussion  of  incidental  questions,  and 
chiefly  in  reply  to  statements  of  the  delegates  of  the  United 
States.  The  conference  was  asked,  he  said,  whether  the  en- 
tire world  should  fix  an  international  ratio,  and  admit  silver  to 
unlimited  coinage.  It  was  spoken  of  as  the  "  rehabilitation  " 
of  silver,  yet  in  the  mind  of  no  one  had  there  been  any  idea 
of  excluding  silver  from  circulation.  It  was  not  that  which 
separated  bimetallists  from  monometallists.  Silver  would 
always  be  a  monetary  metal,  and  he  considered  it  better  to 
maintain  the  existing  condition  of  things,  continuing  to  have 
here  states  with  the  gold  standard,  there  states  with  the  silver 
standard,  and  elsewhere  states  with  the  double  standard.  Any 
attempt  to  establish  an  international  relation  between  the  two 
metals  he  was  opposed  to.  While  France,  as  stated  by  Presi- 
dent Say,  was  awaiting  the  favorable  moment  to  re-enter  the 
system  of  the  double  standard,  in  Switzerland  and  Belgium  the 
gold  standard  was  taken  as  the  objective  point;  but  this  theo- 
retical view  dividing  them,  remarked  Feer-Iierzog,  did  not 
prevent  their  coming  to  an  understanding  in  action  upon  the 
basis  of  the  treaty  of  1865.  He  believed  in  the  future  of  gold 
as  sole  legal-tender  money  of  unlimited  coinage,  and  in  the 
future  of  silver  as  mere  fractional  coin,  because  silver  was  an 
inferior  metal,  ill  adapted  to  the  needs  of  higher  civilization, 
inconvenient  for  private  persons,  only  fit  as  a  standard  for 
backward  nations;  a  metal  the  value  of  which  had  been  con- 
stantly depreciating  for  four  centuries,  and  which,  when  main- 
tained in  the  rank  of  legal  money  by  civilized  peoples,  caused 
in  a  certain  way  the  emission  of  paper  money.  It  was  be- 
cause monometallists  wished  to  assure  to  the  nations  the  bene- 
fits and  guarantees  of  a  metallic  circulation  that  they  rejected 
the  silver  standard,  behind  which  they  detected  the  grave 
abuse  of  paper  money.  The  possibility  of  establishing  by 
international  agreement  a  fixed  relation  of  value  between  the 
two  metals  he  denied  entirely,  considering  it  practically  and 


ITALY'S  EXCEPTIONAL  POSITION  219 

materially  impossible  anywhere  to  establish  a  ratio  that  would 
not  be  constantly  disturbed  by  the  varying  requirements  of 
commerce  and  the  Asiatic  world,  and  also  by  the  variations 
in  the  industrial  and  artistic  use  of  the  metals. 

Italy  was  in  a  situation  differing  somewhat  from  that  of 
other  states  of  the  Latin  Union.  Her  currency  consisting  of  in- 
convertible paper,  and  her  liabilities  being  heavy,  she  naturally 
hesitated  to  exclude  silver,  with  which  she  could  acquit  herself 
more  easily  than  with  gold.  Count  Rusconi  said  he  would 
like  to  see  the  conference  express  itself  on  the  question  whether 
it  were  possible  to  establish  a  fixed  relation  between  silver  and 
gold;  if  it  were  decided  to  be  possible,  then  the  means  to  es- 
tablish such  a  ratio  could  be  discussed.  He  did  not  think  bi- 
metallism offered  so  many  disadvantages  that  it  could  be  said 
mankind  had  made  a  mistake  in  the  concurrent  use  of  the  two 
metals  during  the  entire  course  of  the  ages.  Nor  did  he 
favor  the  division  of  the  world  into  two  camps  absolutely  sep- 
arated from  each  other.  He  had  observed  with  pleasure  that 
no  one  in  the  assembly  demanded  the  ostracism  of  silver;  from 
different  points  of  view  its  utility  as  money  was  recognized, 
and  he  thought  that  all  there  was  to  do  was  to  fairly  face  the 
fundamental  proposition  of  the  United  States  —  the  deter- 
mination of  a  relation.  He  believed  such  a  relation  was  prac- 
ticable, that  it  would  maintain  itself  in  the  midst  of  the  fluc- 
tuations of  the  market,  and  that  its  establishment  was  not 
like  the  squaring  of  the  circle,  impossible  of  solution.  A 
metal  was  one  thing,  money  was  another.  Nature  made  the 
metal,  law  alone  made  the  money.  "  If,"  he  continued,  "  the 
uncoined  metal  is  subjected  as  merchandise  to  all  the  accidents 
of  supply  and  demand,  all  the  variations  of  the  market,  the 
coined  metal,  being  no  longer  a  merchandise,  but  having  legal 
tender  power,  has  a  price  which  does  not  vary.  In  a  piece  of 
metal  coined  according  to  certain  rules  as  to  alloy,  impression, 
size,  shape,  weight,  the  law  becomes  in  a  manner  incarnate.  It 


220  THE  CONFERENCE  OF  1878 

gives  it  the  power  of  paying  obligations,  a  virtue,  a  price  which 
the  metal  merchandise  could  not  obtain.  Our  countrymen 
would  be  greatly  astonished  if  they  were  to  be  told  that  the 
5-franc  piece  which  they  laid  by  in  1873,  which  they  put  into 
a  savings-bank  or  kept  in  their  chests,  has  in  the  last  five  years 
performed  all  the  somersaults  outlined  in  the  very  instructive 
table  which  the  Director  of  the  Administration  of  Coins  and 
Metals  of  Paris  has  kindly  communicated  to  the  conference. 
The  metal  changes  in  value,  it  is  true;  but  as  long  as  the  state 
maintains  itself  the  coin  does  not  change;  it  has  actually  and 
effectively  the  value  which  is  indicated  by  its  imprint." 

As,  in  his  belief,  this  conventional  relation  could  exist  and 
endure,  Count  Rusconi  urged  that  the  conference,  in  establish- 
ing it  by  mutual  agreement,  should  thus  give  another  guar- 
antee, and,  perhaps,  the  most  stable  of  all,  to  the  peace  of  the 
world.  He  had  never  maintained,  he  said,  that  a  fixed  ratio, 
in  order  to  be  efficient,  must  be  universal,  nor  did  he  believe  in 
the  necessity  nor  even  the  utility  in  the  present  state  of  the 
world  of  the  universality  of  the  double  standard,  but  he  be- 
lieved that  what  then  existed  between  several  states  might 
exist  in  the  same  way,  by  virtue  of  the  same  principle,  between 
a  larger  number  of  states;  the  broader  the  basis,  the  greater 
the  stability  of  the  system.  The  idea  of  the  United  States 
seemed  to  him  feasible,  and  he  regretted  that  the  majority  of 
the  conference,  judging  from  another  standpoint,  seemed  in- 
clined to  reject  it  before  sufficiently  considering  it.  The  ques- 
tion was  of  great  importance,  in  his  opinion.  Beyond  doubt, 
there  were  among  those  represented  at  the  conference  some 
states  whose  voice  had  not  all  the  weight  desirable,  owing 
to  financial  difficulties,  which  various  circumstances  had  caused 
to  weigh  upon  them,  but,  if  only  two  or  three  of  the  greater 
commercial  nations  of  the  world  —  France  and  England,  for 
instance  —  should  come  to  an  agreement  with  the  United 
States,  the  imposing  group  would  soon  draw  the  rest  of  the 


NO  DESIRE  FOB  INTERNATIONALLY  221 

world  into  its  orbit.  It  would  give,  he  thought,  to  the  bimetal- 
lic system  a  basis  broad  enough  to  insure  the  stability  of  the 
relation  of  the  two  metals,  would  stimulate  their  circulation, 
and  facilitate  the  return  of  paper-money  countries  to  a  metallic 
circulation.  This  measure,  which,  for  his  own  part  and  as  an 
Italian,  he  ardently  desired,  he  was  afraid  of  seeing  compro- 
mised by  the  demonetization  of  silver  or  by  the  maintenance  of 
that  metal  in  a  depressed  and  sickly  state,  for  which,  by  mere 
words,  no  efficacious  remedy  would  be  brought. 

Baralis  seconded  his  colleague's  remarks  by  a  strong  ap- 
peal for  some  action,  and  asked  if  it  were  not  possible  by 
mutual  concessions  to  create  an  international  coinage.  He 
urged  that  a  committee  be  appointed  to  prepare  that  phase  of 
the  subject  for  consideration,  and  cited  the  good  results  follow- 
ing the  union  of  four  states  by  the  agreement  of  1865.  A 
larger  number  of  nations  might  enter  into  an  agreement  which 
would  be  mutually  advantageous,  and  might  help  the  situa- 
tion as  to  silver.  But  President  Say  declared  that  this  was  an 
incidental  proposal,  and  that  the  question  before  the  confer- 
ence was  the  reply  to  the  American  propositions,  and  the  con- 
ference decided  that  the  discussion  of  those  propositions  should 
take  its  course. 

The  French  delegates  at  no  time  expressed  any  desire  for 
an  international  monetary  system  which  eleven  years  before 
France  had  sought  so  earnestly  and  skilfully  to  promote.  But 
that  was  Xapoleonism,  and  jSTapoleonism  was  dead.  Another 
significant  point  to  notice  is  that  while  the  Italian  delegates  to 
the  conference  of  1867,  like  those  from  other  states,  declared 
for  the  gold  standard  for  the  purposes  of  effecting  an  inter- 
national agreement,  those  to  the  conference  of  1878  asked 
for  such  a  currency  to  be  considered  from  a  bimetallic  stand- 
point and  as  a  means  of  keeping  up  the  value  and  use  of  silver. 
It  is  quite  possible  that  Italy's  fall  to  a  paper  basis  had  much  to 
do  with  its  change  of  position. 


222  THE  CONFERENCE  OF  1878 

The  delegate  from  Greece,  the  remaining  state  in  the 
Latin  Union,  stated  that  his  government  was  in  the  same  atti- 
tude of  expectancy  as  France,  and  he  could  not  give  his  adhe- 
sion to  any  resolutions  of  a  nature  to  create  the  impression  that 
his  government  would  renounce  that  attitude. 

The  only  other  bimetallic  country  represented  was  Hol- 
land, where  also  the  coinage  of  silver  had  been  suspended. 
Yrolik,  who  was  unavoidably  absent,  telegraphed  to  Count 
Rusconi,  of  Italy,  on  the  last  day  of  the  conference,  authorizing 
him  to  lay  upon  the  table  a  copy  of  the  address  of  the  Society 
of  the  Netherlands  for  the  Promotion  of  Industry  to  the  King 
of  Holland  in  1876,  already  noted  in  these  pages.  It  will  be 
remembered  that  the  address,  signed  by  Yrolik  as  president  of 
the  society,  while  declaring  that  under  the  circumstances  the 
Netherlands  ought  to  abandon  silver  as  a  standard,  having  no 
other  alternative,  nevertheless  earnestly  urged  the  calling  of 
an  international  conference  with  a  view  to  the  general  adop- 
tion of  the  ratio  of  15.50  to  1,  and  the  free  coinage  of  both 
metals,  as  a  remedy  for  the  silver  depreciation  that  threatened 
injury  to  the  Dutch-Indian  colonies.  Curiously  enough,  the 
American  delegates  took  this  address  as  an  endorsement  of 
their  position  at  the  conference  and  an  utterance  at  variance 
with  the  position  of  Mees,  the  other  Dutch  delegate.  Now 
Mees  was  a  theoretical  bimetallist.  He  was  the  only  delegate 
in  the  conference  of  18G7  who  questioned  the  advisability  of 
a  general  adoption  of  the  gold  standard,  and  the  position  he 
took  in  1878  was  exactly  what  Vrolik  might  have  been  ex- 
pected to  take  had  he  been  present,  judging  from  the  address 
he  sent  for  submission  to  the  conference.  Mees  said  he  had 
no  instructions  which  would  permit  him  to  vote  for  the  proposi- 
tions of  the  United  States.  So  long  as  England  and  Germany 
retained  the  gold  standard  it  would  be  impossible  for  Holland 
to  adopt  another  system,  and  his  government  had  instructed 
him  to  declare  that  it  could  not  bind  itself  internationally  in 


HOLLAND'S  ADVICE  TO  THE  UNITED  STATES  223 

this  matter,  nor  could  it,  under  the  circumstances,  adopt  sep- 
arately any  other  than  the  present  system.  It  was  not  forbid- 
den him,  however,  to  express  his  personal  opinion,  which  was 
that  it  would  be  most  beneficial  to  mankind  if  a  large  group  of 
states  should  adopt  the  double  standard;  but,  while  he  consid- 
ered the  original  idea  inspiring  the  propositions  of  the  United 
States  good  and  sound,  the  propositions  themselves  seemed  to 
him  in  the  existing  state  of  affairs  impracticable  in  Europe, 
where  there  remained  hardly  a  state  in  which  the  coin- 
age of  silver  was  free.  Mentioning,  one  after  another,  every 
nation,  his  conclusion  was  that  the  only  states  which  might 
possibly  accept  the  propositions  of  the  United  States  were 
those  having  a  paper  circulation,  but  it  was  the  opinion  and 
co-operation  of  precisely  these  states,  otherwise  so  important, 
which  could  have  no  practical  utility  from  a  monetary  point 
of  view.  Still  he  did  not  think  it  was  necessary  to  advise  the 
United  States  to  entirely  renounce  their  idea.  If  there  were 
no  chance  of  finding  allies  in  Europe,  it  might  be  different  in 
Central  and  South  America,  in  China  and  Japan,  and  even 
in  the  English  and  Dutch  Indies,  where  the  gold  standard  was 
adapted  neither  to  the  needs  of  commerce  nor  to  the  habits  of 
the  people.  If  after  securing  these  allies  they  subsequently  suc- 
ceeded in  adding  to  them  the  European  countries,  then  given 
over  to  paper  money,  the  union  might  be  sufficiently  vast  to 
enable  the  legal  relation  of  values  to  dominate  over  the  nat- 
ural fluctuations.  He  considered  that  the  general  demonetiza- 
tion of  silver,  undertaken  everywhere  at  once,  would  have  the 
most  fatal  consequences. 

The  suggestion  of  one  of  the  original  bimetallists,  of  mak- 
ing allies  in  South  America,  Asia,  and  in  European  countries 
given  over  to  irredeemable  paper  currency,  could  hardly 
have  been  agreeable  to  the  American  delegates,  when  coupled 
with  the  assertion  of  Feer-Herzog  that  silver  was  the  natural 
monetary  metal  of  backward  nations.  If  the  American  nation 


234  THE  CONFERENCE  OF  1878 

was  a  heavy  debtor  and  still  on  a  paper  basis,  no  nation  in 
Europe  exceeded  it  in  resources,  and  there  was  no  reason  for 
placing  it,  even  by  implication,  in  the  list  of  backward  nations, 
when  its  securities  sold  better  in  the  London  market  than  Eng- 
land's own  consols,  and  when  its  4-per-cents.  easily 'brought 
par,  though  those  of  Germany  were  offered  at  less  than  93,  and 
.those  of  Erance  brought  no  more  than  96,  while  Portugal,  a 
gold-standard  country,  could  not  market  her  bonds  at  all,  except 
upon  the  most  ruinous  terms.  The  American  delegates  court- 
eously refrained  from  expressing  any  resentment  at  the  infer- 
ences to  be  drawn  from  these  remarks,  for  they  were  apparently 
made  without  the  least  purpose  of  belittling  the  United  States, 
even  though  they  may  have  contained  a  little  quiet  ridicule  of 
the  silver  craze  of  the  American  people.  The  European  nations 
were  undoubtedly  anxious  to  have  something  done  to  keep  up 
the  price  of  silver.  The  Netherlands  had  the  welfare  of  her 
Indian  colonies  to  consider;  so  had  England.  The  bimetallic 
states  had  their  stock  of  silver  to  protect ;  while  Germany  had 
a  stock  to  dispose  of,  and,  unless  the  price  was  maintained  in 
some  way,  she  could  sell  it  only  at  a  great  loss.  But  the  gold 
nations  would  not,  and  the  bimetallic  nations  claimed  they 
could  not,  do  anything  for  silver  themselves;  secretly  they 
feared  that  the  United  States  would  not  do  anything  without 
co-operation.  They  hoped  she  would.  It  was  with  this  idea 
that  the  delegate  from  the  Netherlands  suggested  co-operation 
with  Asia  and  South  America;  all  the  delegates  tried  not  to 
discourage  our  government  from  rendering  all  the  help  possi- 
ble in  pulling  the  chestnuts  of  their  governments  out  of  the 
fire,  and  their  idea  seemed  to  be  that,  as  silver  was  largely  pro- 
duced in  the  United  States,  the  government  was  in  duty  bound 
to  assume  the  burden  of  maintaining  the  price,  while  paying  its 
debts  in  gold.  If  Congress  had  not  committed  the  fatal  error  of 
legislating  for  silver  before  seeking  a  conference,  thus  holding 
out  to  Europe  a  hope  inspired  by  embarrassments  of  its  own, 


A  POLITE  REFUSAL  FROM  ENGLAND  225 

and  also  enabling  it  to  find  temporary  relief  in  paying  for  our 
breadstuffs  in  our  own  bonds,  the  American  delegates  would 
have  been  in  a  position  to  have  made  the  European  delegates 
"  squirm,"  and  perhaps  forced  them  to  some  kind  of  an  agree- 
ment. As  it  was,  the  latter  could  not  conceal  their  anxiety  be- 
neath a  disguise  of  polite  indifference,  or  in  the  assumed  com- 
placency of  an  attitude  of  expectancy. 

England's  position  was  that  of  a  polite  and  sympathetic 
refusal  to  accept  the  propositions  of  the  United  States.  Her 
representatives,  said  Goschen,  were  bound  by  instructions  so 
that  they  could  vote  for  no  proposition  compromising  the  gold 
standard,  and,  as  this  was  also  the  case  with  the  Scandinavian 
states,  and  France  did  not  feel  free  to  vote  yet  for  a  change 
in  the  fixed  ratio,  or  for  the  free  mintage  of  silver,  the  United 
States  had  really  invited  the  delegates  to  adopt  a  proposition 
which  some  of  them  were  precluded  from  entertaining.  But, 
he  added,  if  the  proposition  were  rejected  entirely,  the  rejec- 
tion might  be  misinterpreted  by  the  public,  and  unfortunately 
regarded  as  a  verdict  against  silver  money.  In  the  text  of  the 
x\merican  propositions  there  was  a  declaration  for  which  almost 
all  the  delegates  could  vote,  and  to  which,  as  a  principle,  for 
his  own  part,  he  would  willingly  subscribe  —  that  it  was  not 
desirable  that  silver  cease  to  be  one  of  the  money  metals.  But 
it  appeared  that  the  propositions  must  be  taken  as  a  whole,  and 
they  thus  incurred  opposition  and  criticism  that  would  not 
have  arisen  had  the  ideas  been  more  clearly  separated. 

England  intended  to  maintain  her  gold  standard;  Scan- 
dinavia and  Germany  were  of  the  same  opinion,  and  France 
was  unwilling  to  change  her  ratio.  So  very  little  could  result 
from  a  conference  on  such  propositions,  for,  though  Austria, 
Italy,  and  Russia  might  vote  for  them  as  theoretical  questions, 
they  could  give  no  practical  support  because  of  their  forced 
currency,  and  a  theoretical  discussion  of  the  double  standard 
or  the  advantages  of  a  single  standard  would,  in  his  judgment, 
15 


226  THE  CONFERENCE  OF  1878 

be  a  waste  of  time.  If,  however,  the  question  of  the  double 
standard  were  set  aside,  he  thought,  another  question  might 
fairly  be  put  to  the  conference,  and  one  of  a  most  practical 
and  useful  character.  "  Assuming,"  he  said,  "  that  the  uni- 
versal double  standard  preferred  by  the  United  States  be  not 
adopted,  what  will  be  the  future  of  silver?  And  towards  what 
ends  ought  all  states  to  work  as  far  as  practicable?"  The  aim, 
he  thought,  should  be  to  maintain  silver  as  the  ally  of  gold  in 
all  parts  of  the  world  where  this  could  be  done.  A  campaign 
against  silver  would  be  extremely  dangerous,  even  for  coun- 
tries with  a  gold  standard.  Though  England  had  a  gold 
standard,  she  had  great  interest  in  the  maintenance  of  silver 
as  currency.  She  had,  moreover,  in  his  opinion,  a  more  de- 
fined and  less  compromised  position  for  the  discussion  of  this 
question  than  other  countries,  for  she  had  borne  the  deprecia- 
tion of  silver  in  India  without  trying  to  shut  her  doors  to  it. 
She  had  done  more  than  any  other  country,  he  declared,  to 
maintain  silver,  had  allowed  it  to  take  its  natural  course,  while 
other  countries  had  been  shutting  their  doors  ;  and  the  Indian 
government  had  suffered  a  great  loss,  the  merchants  from  fluct- 
uations in  values,  and  public  functionaries  from  the  deprecia- 
tion. Had  the  example  of  other  countries  been  followed  in  In- 
dia, silver  might  have  fallen  an  additional  10  or  15  per  cent. ;  so 
the  laisscz  faire  policy  pursued  for  India  had  done  more 
than  anything  else  to  keep  up  the  value  of  silver.  If,  however, 
other  states  were  to  carry  on  a  propaganda  in  favor  of  the  gold 
standard  and  of  the  demonetization  of  silver,  he  feared  the 
Indian  government  would  be  obliged  to  reconsider  its  position, 
and  to  take  measures  similar  to  those  taken  elsewhere.  In 
that  case  the  scramble  to  get  rid  of  silver  might  provoke  one 
of  the  gravest  crises  ever  undergone  by  commerce.  One  or 
two  states  might  demonetize  silver  without  serious  results,  but 
if  all  demonetized  there  would  be  no  buyers  and  silver  would 
fall  in  alarming  proportions.  Thus,  he  claimed,  all,  or 


GOSCHEN  DECLARES  A  GENERAL  GOLD  STANDARD  UTOPIAN       227 

nearly  all,  states  were  interested  in  silver.  Belgium,  for  ex- 
ample, had  coined  a  large  quantity  of  5-franc  pieces,  and  if 
the  Latin  Union  came  to  an  end  these  coins  would  necessarily 
flow  back  to  Belgium,  which  could  not  then  escape  the  general 
embarrassment.  If  all  states  should  resolve  on  the  adoption 
of  the  gold  standard  there  would  be  a  fear,  on  the  one  hand, 
of  a  depreciation  of  silver,  and  one,  on  the  other,  of  a  rise  in  the 
value  of  gold  and  a  corresponding  fall  in  the  price  of  com- 
modities. Italy,  Russia,  and  Austria,  whenever  they  resumed 
specie  payments,  would  also  require  metal,  and  the  example  of 
other  countries  would  force  them  to  take  gold.  Resumption  on 
their  part  would  be  greatly  facilitated  by  the  maintenance  of 
silver  as  legal  tender  in  some  sections  of  the  world.  While, 
therefore,  the  American  proposal  of  a  universal  double  stand- 
ard seemed  to  him  impossible  of  realization,  a  veritable  Utopia, 
the  theory  of  a  universal  gold  standard  appeared  equally  Uto- 
pian, and,  indeed,  involved  a  false  Utopia.  There  was  a  vicious 
circle ;  states  were  afraid  of  employing  silver  on  account  of  the 
depreciation,  and  the  depreciation  continued  because  the  states 
refused  to  employ  it.  As  long  as  the  German  stock  of  silver 
was  on  the  market,  he  considered  that  an  expectant  attitude 
must  be  maintained,  and  it  was,  he  thought,  in  this  direction, 
renouncing  theoretical  discussion,  that  states  should  use  their 
efforts.  When  speaking  of  the  advantages  of  this  expectant 
attitude,  he  drew  no  distinction  in  his  own  mind  between  the 
countries  which  had  prevented  the  influx  of  silver  by  tempo- 
rary measures  and  those  which,  having  hitherto  left  the  mint- 
age entirely  free,  were  still  patiently  undergoing  all  the  incon- 
veniences of  the  depreciation.  As  to  the  latter  countries,  it 
was  impossible  for  them  to  enter  into  engagements  of  any  kind. 
Their  position,  however,  was  very  different,  and  the  plan  of 
waiting,  which  might  suit  those  who  had  already  taken  de- 
fensive measures,  might  have  a  quite  different  effect  for  those 
still  opposed  to  all  the  dangers  of  the  situation. 


228  THE  CONFERENCE  OF  1878 

A  little  later  in  the  discussion,  Goschen  said  that,  viewing 
the  establishment  of  a  fixed  ratio  between  gold  and  silver  as 
a  principle  simply,  he  would  not  hesitate  to  affirm  the  entire 
and  absolute  impossibility  of  it,  for  many  reasons  of  a  scien- 
tific and  economic  nature  into  which  he  would  not  enter.  The 
conference  might  last  weeks  and  months  if  all  the  questions 
connected  with  money  were  academically  discussed,  and  he 
did  not  think  that  such  was  the  object  of  the  meeting. 

The  response  of  the  Scandinavian  states,  the  only  others 
with  a  gold  standard  represented,  was  hardly  as  favorable  as 
that  of  England.  They  appeared  to  have  no  strong  interest 
in  the  future  of  silver  and  no  fear  of  the  results  of  the  general 
adoption  of  the  gold  standard.  Dr.  Broch,  of  Xorway,  said  the 
double  standard  was  almost  always  an  ill-regulated  system. 
In  reality  there  never  was  a  double  standard.  He  recognized 
that  the  United  States  had  a  great  interest  in  having  other 
countries  make  equal  use  of  the  two  metals,  for  they  feared 
that,  if  the  states  still  subjected  to  the  regime  of  paper 
money  resumed  specie  payments  with  the  single  gold  standard, 
it  would  produce  the  double  consequences  of  increasing  the 
value  of  gold  and  depreciating  that  of  products  of  every  kind. 
This  would,  in  fact,  present  disadvantages  to  the  United 
States  from  their  point  of  view  as  a  great  producing  country 
and  as  a  debtor  state.  He  admitted  that,  having  a  heavy  debt, 
a  rise  of  gold  would  aggravate  its  weight.  But,  he  observed, 
on  the  other  hand,  with  the  double  standard  and  unlimited  sil- 
ver coinage,  it  was  also  to  be  feared  that  everywhere  the  price 
of  provisions  and  of  the  necessaries  of  life  would  be  considera- 
bly increased,  an  evil  which  he  considered  more  serious,  be- 
cause it  reached  not  only  the  proprietor  and  producer,  but  the 
mass  of  consumers,  the  laborers,  petty  employes,  functiona- 
ries —  all  who  received  wages  or  fixed  incomes.  Besides,  said 
Dr.  Broch,  it  seemed  to  be  silver's  destiny  to  be  always  falling. 
After  the  discovery  of  the  mines  of  California  and  Australia, 


SCANDINAVIAN  STATES  REPUDIATE  SILVER  229 

gold  fell,  and  there  was  an  upward  movement  in  silver.  But 
it  never  commanded  a  premium  of  over  2  per  cent.  Follow- 
ing the  development  of  the  silver  mines  and  the  silver  demone- 
tization of  Germany,  the  metal  experienced  a  fall  far  greater 
and  more  permanent.  In  fact,  he  believed,  silver  always  went 
on  losing  in  value  with  the  exception  of  a  few  moments  of 
stoppage,  or  even  an  accidental  rise.  The  system  of  the  gold 
standard,  in  his  view,  offered  great  advantages  ;  gold  on  ac- 
count of  its  greater  portability  would  always  have  the  prefer- 
ence in  our  civilization  for  both  the  foreign  and  domestic 
trade,  and  it  had  become  the  money  of  all  progressive  peoples. 
He  considered  that  it  was  not  so  much  the  lack  of  metallic 
currency  as  the  organization  of  the  banks  and  the  deplorable 
condition  of  the  finances  which  must  be  held  responsible  for  the 
fact  that  so  many  nations  were  still  subject  to  the  regime  of 
paper  money..  It  would  require,  he  believed,  much  less  gold 
than  was  generally  supposed  for  Russia,  Austria,  and  Italy  to 
resume  specie  payments,  for  experience  had  shown  that  it  re- 
quired an  amount  of  gold  equal  only  to  its  premium  over  the 
paper.  The  sum  required  by  Xorway  to  adopt  the  gold  stand- 
ard had  been  inconsiderable,  and  it  would,  in  his  opinion,  be 
a  great  exaggeration  to  say  that  the  total  production  of  gold 
for  ten  years  would  suffice  for  resumption  in  the  three  coun- 
tries he  had  mentioned.  He  then  paid  a  tribute  to  the  United 
States,  praised  the  jealousy  with  which  they  guarded  the  na- 
tional credit,  and  said  that,  although  Europe  might  differ  with 
them  in  its  opinion  on  certain  questions,  the  extent  of  their 
enormous  resources,  and  the  use  they  made  of  them  through 
their  energy  of  character,  were  everywhere  admired.  As  long 
as  they  maintained  a  limit  wisely  fixed  for  the  coinage  of  silver 
money  they  would,  he  predicted,  be  able  to  keep  up  the  value 
of  the  new  silver  dollars  at  par  with  gold,  inasmiteh  as  a  large 
quantity  would  be  demanded  for  domestic  trade.  But  they 
would  not  be  able  to  do  so  if  thev  continued  to  coin  silver  too 


230  THE  CONFERENCE  OF  1878 

long  or  if  they  adopted  unlimited  coinage.  Rather  than  con- 
sider the  American  propositions,  he  thought  it  would  be  better 
to  come  to  an  agreement  upon  a  gold  coin  which  should  be 
legal  tender  at  par  in  all  states  having  the  gold  standard  or 
the  double  standard,  and  likewise  upon  a  silver  coin  to  be 
legal  tender  at  par  in  all  states  having  the  silver  standard.  It 
would  then  be  for  commerce  to  regulate  the  relative  value  of 
gold  and  silver.  "Waern,  the  Swedish  delegate,  endorsed  Dr. 
Broch's  position,  laying  special  stress  upon  the  statement  that 
nations  with  comparatively  little  wealth  could,  by  good  mone- 
tary laws,  good  institutions  of  credit,  and  prudence  in  their  for- 
eign commerce,  retain  sufficient  specie  for  their  exchanges 
and  make  their  paper  convertible;  biit  the  richest  country 
could  retain  neither  gold  nor  silver  if  its  currency  laws  were 
bad,  the  banks  mismanaged,  and  its  imports  excessive. 

This  leaves  the  attitude  of  Russia  and  Austria  only  to  be 
considered  —  both  countries  on  a  silver  basis  nominally,  but 
in  reality  having  only  a  currency  of  inconvertible  paper.  C. 
Von  Hengelmiiller  said  the  Austro-Hungarian  government 
had  given  its  representatives  no  authority  to  bind  it,  but,  in 
the  opinion  of  that  government,  the  depreciation  of  silver  was 
greatly  to  be  deplored.  In  theory  it  could  subscribe  to  the 
propositions  of  the  United  States,  but,  unfortunately,  the  ad- 
vantages of  the  double  standard  depended  upon  its  general 
adoption,  which,  in  the  existing  state  of  affairs,  was  not  to  be 
looked  for.  So  Austria-Hungary  was  also  compelled  to  main- 
tain the  attitude  of  expectancy.  He  feared,  however,  that 
the  rejection,  pure  and  simple,  of  the  American  propositions 
might  be  interpreted  by  the  people  as  a  conclusion  that  there 
was  actually  nothing  to  be  done  to  arrest  the  fall  of  silver. 
If,  to  avoid  this  difficulty,  the  conference  desired  to  formulate 
its  opinions  -in  a  response  to  the  questions  proposed,  his  gov- 
ernment would  take  its  stand  by  the  side  of  those  pronouncing 
in  favor  of  the  double  standard.  This  declaration  was  fully 


BIMETALLISM  RECEIVES  BUT  LITTLE  CORDIAL  SUPPORT  231 

endorsed  by  the  other  Austrian  delegate,  Count  von  Kuefstein, 
who  appeared  for  the  first  time  at  the  fourth  session. 

The  Kussian  delegate  declared  that  his  government,  al- 
though feeling  it  necessary  to  reserve  its  decision  till  the 
time  of  the  resumption  of  specie  payments,  had  accepted  the 
invitation  to  the  conference  in  part  to  respond  to  the  desire 
of  the  American  government,  and  in  part  with  the  hope  of 
gathering  precious  material.  He  was  opposed  to  the  double 
standard,  and,  to  show  how  antagonistic  it  was  to  the  nature  of 
things  to  endeavor  to  establish  a  fixed  relation  between  the 
value  of  gold  and  that  of  silver,  he  cited  the  experience  of  his 
own  country,  where,  in  187G,  the  depreciation  of  silver  be- 
came so  great  that  paper  reached  a  premium  of  5  per  cent, 
as  to  silver,  and  the  government  was  obliged  to  suspend  the 
coinage  of  silver,  though  not  paying  in  specie. 

Thus  from  but  two  of  the  three  governments  condemned 
to  the  use  of  inconvertible  paper  did  the  bimetallic  proposi- 
tions of  the  United  States  secure  an  endorsement,  and  Italy 
was  the  only  state  giving  them  unreserved  and  cordial  sup- 
port. Of  the  specie-paying  states  represented,  all  either  op- 
posed the  bimetallic  idea,  or  assumed  the  attitude  of  expect- 
ancy, which  was  really  the  attitude  of  watchful  inactivity 
contributing  to  the  further  decline  of  silver.  Enthusiastic 
people  in  the  United  States  had  been  led  to  suppose  from  the 
earnestness  and  standing  of  the  European  advocates  of  bi- 
metallism that  a  simple  proposition  for  the  adoption  of  a  fixed 
relation  between  the  metals  would  receive  a  hearty  support. 
The  delegates  found  the  situation  altogether  different. 

In  the  discussion,  the  responsibility  for  the  situation  was 
chiefly  and  conveniently  laid  at  the  doors  of  Germany,  though 
there  was  not,  even  among  the  gold  monometallists,  an  entire 
agreement  as  to  the  effect  upon  the  price  of  silver  of  the  Ger- 
man monetary  reform.  In  fact,  it  was  a  much  controverted 
point.  The  controversy  was  precipitated  by  a  statement  made 


232  THE  CONFEKENCE  OF  1378 

by  Goschen  that  the  "temporary  and  abnormal  difficulties 
were  created  by  the  German  stock  of  £15,000,000  of  silver." 
He  claimed  that  it  was  not  the  fact  of  the  stock  being  in  exist- 
ence which  depressed  prices.  If  it  were  in  the  United  States 
treasury  it  would  not,  he  held,  weigh  on  the  market.  The 
trouble  was  that  it  was  liable  to  be  dropped  on  the  market  as 
merchandise  at  any  time.  President  Say  expressed  the  same 
view,  but  Feer-Herzog  maintained  that  it  was  a  mistake  to  re- 
gard the  German  monetary  reform  as  the  principal  cause  of  the 
depreciation  of  silver,  or  of  the  instability  of  its  relation  to 
gold.  "  The  centre  of  gravity  of  the  commercial  movement  of 
silver,"  he  said,  "  is  not  in  Germany;  it  is  not  contained  in 
the  existence  of  this  stock  of  silver  ready  for  the  market  of 
which  a  bugbear  has  been  made ;  this  centre  of  gravity  is  in  the 
Indies.  Last  year  [1877],  for  example,  there  was  an  exporta- 
tion of  16  to  17  million  pounds  sterling  from  Europe  to  the 
Indies  via  Suez;  in  1876,  about  11  millions  were  sent.  During 
the  preceding  years,  from  1866  to  1875,  the  exportations  had 
been  only  a  few  million  pounds  sterling,  while,  on  the  contrary, 
from  1860  to  1866  the  average  export  reached  12  millions." 
He  claimed  that  this  changeableness  of  the  Indian  trade  con- 
trolled silver  in  the  money  market,  and  was  a  factor  infinitely 
more  important  than  the  German  stock,  which  was  almost 
equivalent  to  the  production  of  the  mines  for  one  year,  but  no 
more.  He  did  not  think  the  German  stock  was  dangerous  be- 
cause it  was  held  ready  to  be  thrown  on  the  market,  for  the 
government  would  act  with  prudence  and  precaution.  The 
sale  was  proceeding  gradually,  while,  on  account  of  famine  or 
some  great  undertaking,  India  might  call  for  an  amount  of 
silver  in  a  single  year,  as  in  1877,  equal  to  the  total  of  the 
Genn an  stock. 

Gibbs,  of  England,  attributed  the  fall  in  silver  to 
the  simultaneous  action  of  several  accidental  causes  —  to 
the  excessive  yield  of  the  silver  mines,  to  the  suspension  of 


WHAT  CAUSED  THE  DEPRECIATION  OF  SILVER  233 

mintage  in  the  states  of  the  Latin  Union,  and  chiefly  to  the 
demonetization  of  silver  in  Germany,  by  virtue  of  which  that 
country  had  become  a  producer  of  the  white  metal,  and,  unlike 
normal  production,  the  German  silver  was  a  definite  mass  al- 
ready in  the  hands  of  the  vendor.  At  one  time,  much  in  the 
same  way,  a  large  stock  of  copper  in  Chili,  in  addition  to  the 
ordinary  production,  led  to  a  heavy  fall  in  the  value  of  that 
metal.  Feer-Herzog  replied  that  Gibbs  was  looking  at  the 
German  stock  from  the  standpoint  of  the  London  market, 
while  his  own  standpoint  embraced  the  entire  globe.  Dana 
Horton,  who  showed  himself  in  the  discussion  one  of  the  best- 
informed  members  of  the  American  delegation,  pointedly 
asked  Feer-Herzog  if  he  should  continue  to  discover  the  causes 
of  the  monetary  derangement  in  the  demand  of  India  rather 
than  in  the  supply  of  Europe  if  the  states  of  the  Latin  Union 
adopted  the  gold  standard  and  put  their  silver  on  the  market, 
the  goal  at  which  the  Swiss  delegate  said  his  government  was 
aiming.  Such  a  demonetization  would  necessarily  put  on  the 
market  a  great  mass  of  silver  5-franc  pieces.  Feer-Herzog 
did  not  refer  to  the  matter  again. 

Another  point  over  which  there  was  some  difference  of 
opinion  was  the  effect  on  the  price  of  silver  of  the  suspension 
of  silver  coinage  in  the  Latin  Union.  Gibbs  considered  it  an 
important  influence.  Feer-Herzog  thought  this  also  a  mistake, 
for  no  5-franc  pieces  were  coined  at  the  French  mint  from 
1857  to  1865,  and  that  did  not  prevent  the  rise  of  silver.  The 
Latin  Lrnion  did  not  limit  the  mintage  of  5-franc  pieces  till 
the  commercial  ratio  was  16  to  1.  Thus,  said  Feer-Herzog, 
the  fall  of  silver  preceded  the  measures  of  restriction;  it  was 
the  fall  which  instigated  those  measures.  Goschen  submitted 
that  this  evidence  was  not  conclusive,  and  did  not  exclude 
the  fact  that  when  the  right  of  coinage  wras  restricted,  that  re- 
striction might,  and  necessarily  must,  have  contributed  in  its 
degree  to  the  fall  of  silver.  When  one  had  in  his  coffers  a  sil- 


234  THE  CONFERENCE  OF  1878 

ver  ingot  which  he  knew  he  could  immediately  convert  into 
money,  and  of  which  he  knew  he  could  always  in  that  way 
make  an  immediate  use,  that  metal  had  more  value  than  if  it 
could  be  used  only  in  manufacture,  the  conditions  of  which  had 
to  be  discussed,  and  the  demand  for  which  might  have  to  be 
long  awaited.  It  followed,  said  Goschen,  that  the  restrictive 
measures  of  the  Latin  Union  had  assuredly  contributed  to  the 
depreciation  which  other,'  anterior,  and  more  active  causes  had 
provoked.  Fenton  spoke  of  the  peculiar  conditions  affecting 
silver  at  the  time  the  Latin  Union  closed  its  mints,  an  act  which 
added  to  the  unprecedented  combination  of  circumstances 
against  silver.  Feer-IIerzog  said  he  felt  bound  to  declare 
plainly  that  the  states  of  the  Latin  Union,  acting  under  full 
responsibility  for  their  proceedings,  were  entitled  at  that  time 
to  consider  their  own  interests  exclusively.  Their  urgent,  im- 
perative interest  lay  in  guarding  themselves  against  the  in- 
vasion of  a  metal  already  depreciated.  If  the  limitation  of  the 
mintage  had  not  been  decreed,  the  German  monetary  reform 
would  have  been  effected  at  their  expense;  all  the  silver  of 
Germany  would  have  been  poured  into  France,  and,  not  in 
several  years,  but  in  several  months,  a  billion  of  francs  in 
thalers  and  florins  would  have  taken  the  place,  over  the  area 
of  the  union,  of  a  billion  of  gold.  By  virtue  of  what  principle, 
he  asked,  could  it  be  asserted  that  the  states  of  the  Latin 
Union  ought  to  bear  the  cost  of  this  operation  and  alone  un- 
dergo its  consequences  ?  Were  the  people  of  England  and 
America  in  possession  of  a  privilege  by  virtue  of  which  the 
monetary  system  of  the  Latin  Union  must  be  regulated  to 
their  advantage,  and  so  as  to  insure  profit  to  them?  Evidently 
not,  he  said,  any  more  than  the  subjects  of  the  Latin  Union 
had  a  vested  right  in  the  monetary  systems  of  England  and 
America.  He  spoke  with  much  animation,  denying  that  the 
measures  of  the  union  were  open  to  reproach,  and  the  question, 
which  was  simply  an  incidental  one,  was  then  dropped. 


GENERAL  WALKER'S  PLEA  FOR  AN  AGREEMENT  235 

The  delegates  of  the  United  States  were  not  silent  while 
those  of  foreign  countries  were  declaring  their  positions  and 
the  incidental  questions  were,  being  discussed.  The  regular 
order  of  the  debate  has  been  departed  from  for  the  purpose  of 
presenting  at  once  and  more  intelligently  the  attitude  of 
Europe,  and  it  now  remains  to  note  the  arguments  of  our  rep- 
resentatives. They  presented  their  case  with  marked  ability, 
with  earnestness  and  evident  sincerity,  occupying  their  full 
share  of  the  time.  They  were  in  a  disadvantageous  position, 
having  presented  propositions  which  the  foreign  delegates 
either  opposed  as  impracticable  or  illogical,  or  rejected  for  the 
time  as  impossible,  and  being  compelled  to  defend  their  posi- 
tion without  support  from  any  quarter  except  Italy  —  a  coun- 
try in  bad  financial  circumstances. 

Groesbeck's  opening  remarks  in  submitting  the  proposi- 
tions were  made  in  the  second  session.  During  the  fourth, 
August  22,  when  the  impossibility  of  securing  any  practical 
results  was  clearly  manifest,  General  Walker  set  forth  in  a 
long  address  the  reasons  for  the  belief  in  the  possibility  and 
efficiency  of  international  bimetallism.  He  held  that  the 
propositions  did  not  raise  simply  a  theoretical  question,  but,  in 
distinct  form  and  free  from  the  embarrassments  of  economic 
theory,  a  practical  question  of  vast  importance  to  Europe,  to 
America,  and  to  mankind.  He  combated  the  idea  that  the 
misfortunes  of  silver  were  due  to  the  workings  of  natural  law 
in  the  following  words : 

"  Silver  has  not  ceased  to  be  money  as  the  result  of  natural  causes, 
that  is,  of  economical  forces  operating  upon  the  choices  of  individual 
producers  or  exchangers.  The  very  suddenness  of  the  change  and 
the  violence  by  which  it  has  been  accomplished  would  suffice  to  show 
this,  did  we  not  know  that  the  rejection  of  silver  has  been  effected 
by  action  distinctly  political,  the  laws  or  decrees  of  government, 
those  laws  and  decrees  having,  it  is  notorious,  been  suggested  and 
iirged  by  the  political  economists  of  a  certain  school,  incited  thereto 
in  no  small  measure  by  the  recommendations  of  a  conference  not 
wholly  unlike  the  present.  I  refer  to  the  conference  of  1867. 

"  We  are  not,  therefore,  asking  this  body  to  decree  the  reversal  of 
a  law  of  nature  in  asking  the  consideration  of  the  expediency  of 


236  THE  CONFERENCE  OP  18T8 

arresting  and,  so  far  as  practicable,  reversing  the  movement  for  the 
demonetization  of  silver.  So  far  as  that  movement  has  proceeded, 
itiias  been  wholly  a  work  of  man's  accomplishing,  as  it  was  of  man's 
devising.  The  action  of  Germany  in  1871  was  wholly  gratuitous 
and  of  choice,  not  compelled  or  even  suggested  by  any  commercial, 
industrial,  financial,  or  fiscal  stress  or  exigency. 

"  That  action,  involving  important  changes  in  the  monetary  policy 
of  the  Scandinavian  kingdoms  and  of  the  Latin  Union,  was,  as  we 
conceive,  taken  under  bad  advice,  with  partial  or  mistaken  views 
of  the  proper  relations  of  silver  to  the  trade  of  the  civilized  nations 
in  their  present  state  of  development,  and  with  little  or  no  considera- 
tion of  the  broader  question  as  to  the  effects  upon  the  production  of 
wealth  which  would  be  wrought  by  so  great  a  diminution  of  the 
money  supply  of  the  world. 

"As  the  conference  of  18G7,  wholly  absorbed  in  the  consideration 
of  the  means  of  securing  international  coinage,  did  incontestably 
exert  a  powerful  influence  in  initiating  the  movement  for  demone- 
tizing silver,  it  remains  for  the  conference  of  1878,  with  a  more 
sober  judgment  and  a  larger  view  of  human  interests,  instructed  as 
the  nations  have  been  by  the  bitter  experience  of  the  past  few  years, 
to  put  forth  its  hand  to  stay  the  progress  of  that  demonetization 
which  has  already  brought  such  mischiefs  upon  trade  and  the  pro- 
duction of  wealth. 

"  In  referring  thus  to  the  conference  of  18G7,  I  have  no  Avish  to 
disparage  the  object  of  international  coinage.  A  uniform  coinage 
of  money  by  all  civilized  nations  would  offer  certain,  definite,  ap- 
preciable, but  not  momentous  practical  advantages,  and  would  be, 
moreover,  of  considerable  sentimental  importance.  It  is  worth  the 
making  a  certain  sacrifice  of  national  prejudices;  it  is  worth  the  in- 
curring a  certain  definite  expense  in  recoinage,  and  a  certain  tem- 
porary embarrassment  of  trade,  pending  the  readjustment  of  mone- 
tary systems  consequent  thereon.  It  is  not  worth  the  sacrifice  of  a 
single  vital  interest  of  mankind,  and  the  conference  of  18(57,  in 
proclaiming  a  crusade  against  silver  for  the  sake  of  forwarding  the 
cause  of  international  money,  did  a  mischief  whose  consequences 
are  even  yet  only  half  unfolded." 

General  Walker  then  proceeded  to  antagonize  Feer-IIer- 
zog's  position  as  to  the  grouping  of  the  nations  in  respect  to 
monetary  circulation,  the  civilized  states  using  gold  as  the  sole 
standard  of  value,  and  the  uncivilized  silver.  There  were 
not  more  than  three  territorially  extensive  countries  in  the 
world,  he  said  —  and  the  experience  of  Germany  showed 
that  she  was  not  one  of  them  —  which  could  possibly  maintain 
a  single  gold  standard  upon  true  economic  principles. 

"  If  there  is  any  one  thing  which  political  economy  declares  with 
an  unfaltering  voice,  it  is  that  the  principal  money  circulating  in  the 
hands  of  the  people  of  any  country  should  be  of  full  metallic  value. 
The  coinage  of  billon,  or  token  money,  is  indeed  admitted  by  politi- 
cal economists,  but  only  as  applied  to  what  may  legitimately  and 


EVILS  OF  A  DIMINISHED  MONEY  SUPPLY  237 

strictly  be  termed  the  "  small  change  "  of  trade.  To  extend  the  oper- 
ation of  a  heavy  seigniorage  to  the  main  body  of  the  money  of  a 
country,  what  is  it  but  to  corrupt  the  coin  and  to  generate  in  the 
public  body  the  morbus  numericus  of  which  Copernicus  wrote,  that  it 
is  more  fatal  than  civil  war,  pestilence,  or  famine? 

"Better,  far,  inconvertible  paper  money  than  a  debased  coinage; 
for  the  former,  at  least,  does  not  deceive  the  sense  of  the  people.  If 
a  wrong,  it  is  a  wrong  confessed  and  which  is  always  suggestive  of 
its  proper  remedy.  The  universal  gold  monometallism  of  Europe 
which  has  been  recommended  would,  in  most  countries,  amount  sim- 
ply to  this:  A  scanty  coinage  of  gold,  held  mainly  by  the  banks  for 
the  settlement  of  international  obligations,  and  a  vastly  preponder- 
ating circulation  of  debased  silver." 

He  maintained  that  if  England,  while  exacting  a  heavy 
seigniorage  upon  the  shilling,  florin,  and  half-crown,  so  carry- 
ing the  principle  of  billon  to  the  verge  of  safety,  still  main- 
tained in  circulation  a  large  amount  of  sovereigns  and 'half- 
sovereigns,  it  was  because  of  her  great  wealth  and  rapid  circula- 
tion, and  few  other  countries  in  Europe  could  do  it.  "  If,"  he 
added,  "  those  nations  only  are  to  be  called  civilized  which  are 
prepared  to  receive  gold  as  their  principal  money,  their  sole 
money  of  full  value,  we  must,  perforce,  take  a  somewhat  lower 
view  that  we  have  been  wont  to  do  of  the  progress  of  man- 
kind." 

He  then  entered  into  an  economic  argument  to  show  that 
a  fixed  relation  could  be  maintained,  freeing  international  ex- 
change from  embarrassment,  so  that  all  would  gain  and  no  one 
would  lose.  But  more  important,  in  his  view,  was  the  probable 
effect  upon  the  production  of  wealth  resulting  from  the  diminu- 
tion of  the  money  supply  of  Europe  and  America  by  the  con- 
tinued demonetization  of  silver.  He  said : 

"  Cutting,  as  in  the  first  instance  it  does  to  the  very  quick,  into 
profits  of  the  entrepreneur  or  man  of  business,  which  profits  con- 
stitute the  sole  motive  to  production  under  the  modern  organization 
of  industry,  and  enhancing,  as  in  its  ultimate  operation  it  must,  the 
burden  of  all  debts  and  fixed  charges,  public,  private,  or  corporate  — 
which  debts  and  charges  are.  in  effect,  the  mortgage  which  the  rep- 
resentatives of  past  production  hold  upon  the  products  of  current 
industry  — a  diminution  of  the  money  supply  is  one  of  the  gravest 
evils  which  can  menace  mankind 

"At  a  time  when  the  production  of  the  two  historical  money 
metals,  jointly,  is  diminishing,  this  most  unfortunate  occasion  is 
taken  to  throw  one  of  them  out  of  use  as  money  of  full  value ;  to  remit 


238  THE  CONFERENCE  OF  1878 

it  to  the  uses  of  token  money,  and  to  banish  what  of  the  accumulated 
stock  of  three  thousand  years'  production  cannot  thus  be  employed, 
to  be  hoarded  in  the  East  as  treasure  or  devoted  to  personal  orna- 
ment. 

"Against  so  great  a  wrong  to  civilization  and  to  the  hopes  of  man- 
kind the  representatives  of  the  United  States  here  present  raise 
their  earnest  protest  and  warning.  This  is  our  real  interest  in  the 
silver  question.  This  it  is  which  brings  us  here." 

The  fact  that  the  United  States  produced  silver,  he  con- 
tinued, was  a  consideration  so  slight  in  the  presence  of  far- 
reaching  and  enduring  interests  like  these  that  it  sank  utterly 
out  of  view.  Xor  did  the  interest  of  his  government  arise  out 
of  the  possession  of  a  stock  of  silver  of  which  it  feared  the  de- 
preciation, for  it  had  only  a  moderate  supply  of  specie,  and 
most  of  that  was  gold.  "  But  if  we  held  as  large  a  stock  as 
France  or  India,  we  should,"  he  asserted,  "  in  our  view  of  the 
relations  of  the  money  supply  to  the  interests  of  trade  and  the 
production  of  wealth,  look  upon  the  fall  of  that  silver  to  45, 
to  40,  or  to  30  pence  an  ounce  simply  as  a  net  definite  loss,  once 
for  all,  of  so  much  of  our  accumulated  wealth  —  a  loss  to  be 
made  good  by  increased  frugality  and  industry  —  while  we 
should  look  upon  the  reduction  of  the  stock  of  money  by  such 
a  cause  as  an  event  of  vastly  greater  magnitude,  bringing  in  its 
train  indefinite  possibilities  of  evil,  not  to  us  alone,  but  to  the 
whole  world,  not  in  our  time  only,  but  through  generations  to 
come." 

Feer-IIerzog  was  the  chief -defender  of  gold  monometallism 
from  the  sharp  assaults  of  the  American  delegates.  In  reply 
to  General  Walker  he  questioned  the  historical  accuracy  of 
the  statement  that  Europe  was  for  two  centuries  devoted  to  a 
silver  currency.  The  truth,  he  said,  was  that  in  Europe,  as 
in  the  United  States,  there  was  a  gold  and  silver  currency,  with 
a  much  larger  proportion  of  gold  than  of  silver,  the  silver  cur- 
rency being  especially  that  of  the  less  rich  and  less  industrial 
nations.  He  thought  also  that  Walker  was  wrong  in  criticising 
the  tendencies  of  the  conference  of  1867,  and  called  attention 
to  the  fact  that  then  the  United  States  showed  themselves 


FEER-HERZOG'S  DEFENSE  OF  MONOMETALLISM  239 

warm  supporters  of  the  gold  standard.  "  It  was  they  who  led 
the  campaign  in  favor  of  gold,"  he  said.  The  conference  of 
1867  desired  what  he  now  asked  for,  a  division  of  the  world 
between  gold  and  silver  —  to  reserve  gold  for  the  civilized, 
rich,  active  nations,  leaving  silver,  the  inferior  metal,  to  the 
less  advanced  peoples,  who  were  content  with  it,  and  even  pre- 
ferred it,  provisionally  retaining  the  double  standard  for 
nations,  whose  situation  debarred  them  from  pronouncing 
immediately  for  one  metal  or  the  other.  He  also  held,  con- 
trary to  the  assertions  of  the  American  delegates,  that  the 
greater  part  of  the  perturbations  and  disasters  which  had  been 
provoked  in  great  nations  had  been  caused  by  the  double  stand- 
ard. Reviewing  briefly  the  monetary  history  of  England, 
France,  and  the  United  States,  he  said  that  the  double  standard 
had  nearly  always  been  an  alternating  standard.  The  system 
was  a  necessary  speculation  at  the  expense  of  the  people  who 
adopted  it  for  the  benefit  of  people  who  did  not  adopt  it.  He 
denied  that  the  exclusive  gold  standard  led  to  the  injurious 
issue  of  fiduciary  money,  but  reasserted  that  such  was  the  result 
of  the  double  standard.  Dana  Horton  took  the  Swiss  delegate 
to  task  at  this  session  also,  holding  that,  even  if  the  double 
standard  acted  as  an  alternating  standard,  neither  the  suspen- 
sion nor  the  entire  suppression  of  one  of  the  two  metals  oc- 
curred. It  was  only  the  withdrawal  into  the  background  of  one 
metal  and  the  prominence  of  the  other,  a  phenomenon  which 
occasioned  less  inconvenience  than  was  supposed. 

At  the  opening  of  the  fifth  session  Groesbeck  made  an 
earnest  appeal  for  an  agreement  on  a  fixed  ratio,  and  asserted 
the  futility  of  the  claim  that  an  equilibrium  of  value  between 
gold  and  silver  could  not  be  maintained,  for,  he  asserted,  it  had 
been  done.  Throughout  the  entire  past  up  to  1873  both 
metals  had  been  in  equal  use  as  money,  and  had  kept  together 
evenly  enough.  Now  and  then,  at  long  intervals,  the  relation 
between  them  had  slightly  changed,  he  admitted,  but  the 


240  THE  CONFEKENCE  OF  1878 

change  was  easily  made  and  without  noticeable  inconvenience. 
Up  to  the  middle  of  the  present  century  it  had  never  been 
suggested  by  any  writer  or  statesman  that  either  of  the  metals 
should  be  generally  abandoned  because  of  the  difficulty  of 
keeping  them  sufficiently  equalized.  This,  he  said,  was  the 
lesson  of  many  centuries,  and,  theorize  as  they  might,  what 
had  been  done  in  the  past  could  be  done  in  the  future.  He  was 
pleased  to  note  that,  in  the  opinion  of  the  conference,  it  was 
not  desirable  to  discontinue  the  use  of  silver  as  legal-tender 
money.  The  conference  of  1867  had  expressed  itself  in  favor 
of  gold  alone;  that  of  1878,  he  thought,  would  be  more  favora- 
ble to  silver,  showing  some  gain  in  sentiment  because  of  recent 
economic  experiences.  He  was  convinced  that  a  proper  use  of 
both  metals  could  not  be  brought  about  by  such  a  plan  as  that 
of  monopolizing  the  gold  for  the  more  advanced  nations,  and 
relegating  silver  to  the  more  backward.  Nations,  he  said, 
could  not  come  together  and  divide  themselves  into  two  such 
classes,  nor  would  commerce  make  such  a  classification. 

If  the  fall  of  silver  were  prevented,  the  rich  and  power- 
ful nations  must  do  something.  The  question  he  would  sug- 
gest, therefore,  was  whether  nothing  should  be  done  for  the 
present,  or  something  should  be  done  at  once.  He  argued,  for 
the  latter  course,  the  unprecedented  conditions  of  1874  re- 
garding silver  having  changed,  there  being  no  silver  on  the 
market  that  could  not  be  taken  care  of  by  agreement,  except 
that  of  Germany.  If  the  yearly  production  amounted  to  $72,- 
000,000,  he  thought  that  the  East  would  absorb  $30,000,000 
of  it,  and  the  silver  states  of  South  America  $5,000,000  more. 
Fully  $30,000,000  worth  would  be  required  for  the  industrial 
arts,  and  to  make  up  the  loss  by  abrasion.  The  small  balance 
could  easily  find  a  place  without  disturbance.  All  that  was 
left  was  the  German  stock  of,  say,  $75,000,000.  The  United 
States  must  coin  at  least  $24,000,000  under  the  new  law,  and 
might  coin  $48,000,000.  It  would  not  take  long,  therefore, 


GROESBECK'S  APPEAL  FOR  SILVER  241 

he  thought,  before  the  states  in  the  agreement  absorbed  all  the 
surplus  silver  and  brought  it  to  a  parity  at  a  fixed  ratio.  Re- 
ferring to  the  experience  of  a  few  years  before  when  the  flood 
of  gold  came  from  California  and  Australia,  and  some  econo- 
mists began  to  talk  of  the  demonetization  of  the  yellow  metal, 
ho  said : 

"  The  flood  subsided,  and  what  came  as  a  danger  remained  as  a 
blessing.  What  if  the  coinage  of  gold  had  been  limited  or  sus- 
pended at  that  time?  It  would  have  been  a  great  error,  resulting 
in  consequences  very  like  to  those  now  upon  us.  Silver  would  have 
been  uppermost,  and  gold,  excluded  from  the  mints,  would  for  a 
time  have  been  only  merchandise,  for  which  there  would  have  been 
but  a  small  demand.  Nine  hundred  millions  of  gold  in  six  years  — 
a  production  that  has  had  no  parallel  in  all  the  past.  It  was  wel- 
comed rather  than  rejected,  and  we  put  upon  it  the  stamp  of  law 
and  made  it  money,  and  so  it  was  saved  from  depreciation.  Seventy- 
five  millions  of  silver!  —  can  we  not  welcome  this  also,  and  put  upon 
it  the  stamp  of  law  and  make  it  money,  and  so  save  it  and  our  own 
silver  from  the  possible  danger  of  further  depreciation? 

"  Gold  and  silver,  neither  alone,  but  both  equally,  have  endured 
a  trial  of  thousands  of  years,  and  through  all  the  past  it  was  never 
suggested  that  they  were  too  abundant.  The  first  suggestion  of 
such  a  kind  occurred  quite  recently,  when  it  was  recommended  that 
gold  should  be  demonetized  because  of  excessive  production.  Alas! 
if  it  had  been  done.  The  second  is  now  to  demonetize  silver.  Alas! 
if  it  shall  be  done.  It  would  almost  as  soon  occur  to  me  to  strike 
into  barrenness  a  part  of  our  wheat-fields  because  now  and  then 
their  harvests  seemed  too  plentiful,  or  to  desolate  some  of  our  mines 
of  coal,  iron,  and  other  minerals,  because  now  and  then  their  yield 
seemed  excessive,  as  to  desolate  any  of  the  mines  of  gold  and  silver, 
because  now  and  then  their  yield  happened  to  be  abundant.  The 
more  reasonable  apprehension  is  that  they  may  at  some  time  fail. 
On  the  other  hand,  population,  labor,  trade,  commerce,  and  the  end- 
less activity  of  life  will  never  fail,  but  ever  increase,  and  their  de- 
mand for  these  metals  will  always  utilize  their  utmost  production. 
How,  then,  shall  both  be  saved?  Not  by  putting  the  small  and 
poor  and  less  civilized  nations  on  silver  and  the  great  ones  upon  gold. 
Far  otherwise.  They  are  to  be  saved  by  the  co-operation  and  in- 
fluence of  the  great  and  powerful  nations.  Must  all  co-operate?  It 
would  be  better,  but  it  is  not  necessary.  There  are  enough  here  in 
this  council  to  accomplish  the  result." 

Realizing  that  the  hesitation  of  France  might  in  some  de- 
gree be  caused  by  the  American  ratio,  he  said : 

"  We  prefer  our  relation,  and  I  believe  if  we  could  all  take  it  to- 
day it  would  be  better  received  and  secure  stronger  acquiescence 
than  if  we  should  go  to  yours.  It  is  not  to  be  overlooked  that  the 
tendency  has  been  to  a  widening,  rather  than  to  a  narrowing,  of  the 
relation.  It  has  been  widened  more  than  once,  and  the  time  may 
have  come  to  make  another  slight  change.  However  that  may  be, 
16 


242  THE  CONFERENCE  OF  1878 

what  I  desire  to  say  in  this  connection  is,  that  if  we  can  agree  upon 
a  plan  to  restore  silver  I  take  it  for  granted  that  all  who  are  parties 
to  the  agreement  should  stand  upon  the  same  relation.  It  may  be 
ours;  it  may  be  yours.  In  the  absence  of  such  an  agreement,  we 
shall,  of  course,  adhere  to  our  present  positions,  and  it  is  unnecessary 
to  decide  which  would  be  the  better  relation." 

Dana  Horton  supplemented  Groesbeck's  earnest  appeal  for 
co-operation  in  a  long  discourse,  citing  many  historical  and 
statistical  facts  in  favor  of  co-operate  action,  and  maintaining 
that  the  alleged  powerlessness  of  the  nations  in  the  existing 
state  of  things,  of  which  Feer-Herzog  and  others  had  spoken, 
did  not  actually  exist.  It  had  never  entered  the  thoughts  of 
the  American  delegates,  he  said,  that  the  proposed  interna- 
tional relation  between  the  two  metals  must  be  adopted  by  the 
entire  world.  The  very  fact  that  the  East  absorbed  the  greater 
part  of  the  silver  production  would  facilitate  the  establish- 
ment of  that  "  quasi-universal  bimetallism  "  of  the  Western 
nations  which  was  the  aim  of  the  conference.  He  furnished 
many  historical  reasons  for  his  belief  in  the  success  of  such  a 
combination,  if  effected. 

Some  of  the  foreign  delegates  manifested  an  impatience 
over  the  continuation  of  the  conference  after  it  became  ap- 
parent that  no  agreement  could  be  reached.  As  early  as  the 
fourth  session,  President  Say  remarked  that,  as  each  delegate 
had  expressed  his  opinion  upon  the  propositions,  the  time  had 
possibly  come  to  form  a  reply  to  them,  if  deemed  wise. 
Goschen  could  see  no  reason  for  lengthening  out  the  debate 
when  there  could  be  no  practical  result.  But  the  American 
delegates  did  not  think  the  limits  of  the  discussion  could  be 
fixed  in  advance.  Ex-Senator  Eenton  submitted  that,  if  the 
propositions  they  had  offered  did  not  appear  acceptable,  a  com- 
mittee might  be  directed  to  formulate  others  on  which  an 
agreement  might  be  easier.  The  subject,  he  urged,  was  too 
important  to  be  hurriedly  dismissed.  In  deference  to  the  de- 
sires of  the  American  delegates,  the  sessions  were  continued  to 
enable  them  to  fully  present  their  case.  Meanwhile  the  Eng- 


ENGLISH  AND  FRENCH  DELEGATES  PREPARE  A  RESPONSE         243 

lish  and  French  delegates  got  together  privately,  framed  a 
reply  to  the  American  propositions,  and  had  it  ready  when  the 
conference  met  for  the  sixth  session,  and  Fenton  obtained  the 
floor  to  make  the  concluding  appeal  for  a  forlorn  hope.  He 
spoke  of  the  depressed  condition  of  trade  and  industry  and  the 
remedy,  as  it  seemed  to  him,  was  some  action  in  harmony  with 
the  general  aims  of  the  conference.  It  might  not  be  practica- 
ble to  step  forward  into  formal  agreement  at  once,  but,  in  his 
judgment,  it  would  be  for  the  interest  of  all  the  states  repre- 
sented to  make  some  expression  distinctly  favorable  to  that 
object.  According  to  reliable  estimates,  there  was  something 
over  £500,000,000  of  silver  in  circulation  in  the  world.  The 
importance  of  the  relation  of  this  volume  of  money  to  the  ex- 
changes and  industries  of  mankind  was  admitted,  he  said,  and 
could  not  well  be  overstated.  He  spoke  eloquently  of  the  re- 
sources of  his  country,  of  its  position  in  resuming  specie  pay- 
ments, but  there  were  difficulties  to  which  he  referred  as  fol- 
lows : 

"  After  all,  even  under  these  favoring  circumstances,  it  must  be 
confessed  that  it  is  hard  work  to  pull  up,  harder  than  I  could  wish. 
We  feel  that  the  case  would  be  made  somewhat  easier  by  inter- 
national co-operation  in  the  fuller  use  of  silver.  In  the  exchanges 
of  trade,  in  the  work  of  production,  in  the  compensations  of  labor, 
and  in  every  business  transaction,  its  freer  course  is  of  first  impor- 
tance. Indeed,  the  question  of  its  free  relation  with  gold  as  money 
is  closely  connected  with  all  the  varied  and  multiplied  interests  of 
daily  national  and  international  affairs. 

"  It  is  the  province  of  practical  statesmanship  to  secure  whatever 
of  beneficent  effect  may  come  from  the  restoration  of  this  metal  to 
an  unfettered  position.  Our  people  have  felt  hopeful  and  bur 
government  has  given  official  expression  of  the  desire  that  this  con- 
ference would  do  something  to  this  end,  and  not  only  for  us,  if  so 
much  for  us,  but  also  for  the  family  of  nations.  We  prefer  not,  if 
we  could,  to  stand  alone.  Our  interests  are  your  interests,  the  in- 
terests of  our  respective  nations  in  this  respect  are  practically  iden- 
tical. 

"  The  representatives  of  the  United  States,  on  behalf  of  their 
government,  at  the  outset,  at  your  instance,  gentlemen,  had  the 
honor  to  make  a  brief  declaration  of  the  questions  for  discussion.  It 
was  in  the  spirit  of  the  invitation  to  you  to  meet  us  in  council.  We 
felt  assured  of  your  approval;  if  not  of  just  that,  of  an  expression 
in  some  form  on  your  part  which  would  lead  us  to  hope  for  inter- 
national agreement  and  co-operation  in  the  not  distant  hereafter. 


244  THE  CONFERENCE  OF  1878 

I  beg  you  to  reassure  us  in  your  own  words,  if  not  in  ours,  and  we 
shall  not  fail  to  report  to  our  government  your  sense  of  regard  for  its 
broad  views  and  liberal  spirit.  In  anticipating  your  decision  I  do 
no  more  than  bespeak  the  action  of  the  eminent  representatives  of 
enlightened  and  progressive  nations." 

!^o  reply  was  made  to  Fenton's  remarks,  and  there  the  gen- 
eral discussion  closed.  President  Say  suggested  an  adjourn- 
ment of  the  session  for  three-quarters  of  an  hour  "  that  the  del- 
egates of  the  European  states  might  agree  among  themselves 
as  to  the  collective  answer  to  the  propositions."  This  was  done, 
and,  upon  reassembling,  the  American  delegates  requested  that 
the  conference  adjourn  after  the  reply  was  presented  till  the 
following  day  to  enable  them  to  agree  as  to  a  response  to  the 
declaration  of  the  foreign  representatives  and  present  observa- 
tions upon  it.  Goschen  said  that  the  conference  should  not  be 
uselessly  prolonged,  but  he  was  disposed  to  allow  the  American 
delegates  the  delay  they  requested.  So  it  was  decided  that  the 
reply  framed  by  the  French  and  English  delegates  should  be 
at  once  presented  and  on  the  following  day  discussed.  The  text 
of  the  reply  was  as  follows : 

"  The  delegates  of  the  European  states  represented  in  the  confer- 
ence desire  to  express  their  sincere  thanks  to  the  government  of  the 
United  States  for  having  procured  an  international  exchange  of  opin- 
ion upon  a  subject  of  so  much  importance  as  the  monetary  question. 

"  Having  maturely  considered  the  proposals  of  the  representa- 
tives of  the  United  States,  they  recognize: 

"  1.  That  it  is  necessary  to  maintain  in  the  world  the  monetary 
functions  of  silver,  as  well  as  those  of  gold,  but  that  the  selection 
for  use  of  one  or  the  other  of  the  two  metals,  or  of  both  simulta- 
neously, should  be  governed  by  the  special  position  of  each  state 
or  group  of  states. 

"  2.  That  the  question  of  the  restriction  of  the  coinage  of  silver 
should  equally  be  left  to  the  discretion  of  each  state  or  group  of 
states,  according  to  the  particular  circumstances  in  which  they  may 
find  themselves  placed;  and  the  more  so,  in  that  the  disturbance  pro- 
duced during  the  recent  years  in  the  silver  market  has  variously  af- 
fected the  monetary  situation  of  the  several  countries. 

"  3.  That  the  differences  of  opinion  which  have  appeared,  and 
the  fact  that  even  some  of  the  states,  which  have  the  double  stand- 
ard, find  it  impossible  to  enter  into  a  mutual  engagement  with  re- 
gard to  the  free  coinage  of  silver,  exclude  the  discussion  of  the 
adoption  of  a  common  ratio  between  the  two  metals." 

This  reply  was  but  briefly  discussed  at  the  seventh  and  the 


NATURE  OF  EUROPE'S  REPLY  245 

last  session.  Gamier,  a  Belgian  delegate,  made  some  pleasant 
remarks  about  the  brilliant  qualities  of  the  American  delegates 
in  debate,  and  said  that  the  frankness  with  which  they  had 
given  their  views  demanded  that  the  response  should  be  equally 
clear.  He  accepted  its  terms,  as  framed,  for  himself  and  his 
colleague,  who,  he  claimed,  had  demonstrated  the  impossibility 
of  a  fixed  relation  between  gold  and  silver.  Count  von  Kuef- 
stein,  speaking  for  Austria,  said  that  he  had  no  objection  to 
the  proposed  response,  as  it  was  a  declaration  entirely  theoreti- 
cal, leaving  to  all  states  a  freedom  which  they  never  intended 
to  limit  in  participating  in  the  conference,  and  by  virtue  of 
which  they  could  each  separately  take  such  measures  as  they 
pleased  in  monetary  matters,  or,  if  they  desired,  could  ally 
themselves  at  any  time  with  other  countries,  or  again  set  on 
foot  a  new  international  investigation.  Goschen  said  that,  as 
the  response  in  no  way  attacked  the  single  gold  standard,  the 
English  delegates  were  free  to  adopt  it.  It  would  be  impossi- 
ble for  them  to  support  any  declaration  in  favor  of  the  double 
standard.  If  in  his  previous  remarks  he  had  affirmed  that  silver 
ought  to  be  an  ally  and  partner  of  gold,  he  by  no  means  in- 
tended to  say  that  the  two  metals  ought  both  conjointly  to  be 
placed  upon  the  same  footing  and  become  legal  tender  in  all 
countries.  He  had  merely  desired  to  combat  the  theory  of  the 
economists  who  demanded  the  universal  adoption  of  the  single 
gold  standard  —  a  measure  which,  in  his  view,  might  be  the 
cause  of  the  greatest  disasters.  "  I  maintain  my  assertions  in 
this  connection  absolutely,"  he  said.  "  I  believe  it  would  be  a 
great,  misfortune  if  a  propaganda  against  silver  should  suc- 
ceed, and  I  protest  against  the  theory  according  to  which  this 
metal  must  be  excluded  from  the  monetary  systems  of  the 
world."  Feer-Herzog  shared  in  the  views  of  the  delegates  of 
England  and  Belgium,  as  to  the  appropriateness  of  the  re- 
sponse. 

Thoerner,  speaking  for  Russia,  declared  that  he  accepted 


246  THE  CONFERENCE   OF  1878 

the  draft  proposed  in  the  narrow  sense,  nothing  being  inferred 
from  it  except  what  was  actually  there.  He  wished  to  guard 
against  any  interpretation  of  it  in  the  sense  of  veiled  adhesion 
to  the  system  of  the  double  standard  to  which  Russian  public 
opinion  was  decidedly  opposed.  Count  von  Kuefstein  rose 
again  to  say  that,  from  the  explanations  given,  it  might  be  in- 
ferred that  the  declaration  implied  an  admission  of  the  im- 
possibility of  an  international  arrangement  for  the  double 
standard.  He  therefore  felt  obliged  to  declare,  for  his  part, 
that  if  he  adhered  to  the  formula  it  was  precisely  because, 
in  his  view,  it  did  not  exclude  the  idea  that  such  an  arrange- 
ment was  possible. 

The  different  interpretations  which  were  thus  made  to  jus- 
tify the  acceptance  of  the  response  showed  that  it  had  been 
skilfully  drawn  to  be  non-committal  and  indefinite.  The  early 
remark  of  the  Belgian  delegate  as  to  its  clearness  was  spoiled 
by  these  evidences  of  the  elasticity  of  its  meaning.  Austria, 
which  announced  that  it  would  take  the  side  of  bimetallism 
in  theory,  and  Switzerland,  whose  delegate  denied  the  possi- 
bility of  bimetallism,  even  in  theory,  could  both  accept  it. 

The  only  objection  to  it  came  from  Italy.  Count  Rusconi 
said  he  could  not  accept  its  "terms,  for  the  object  of  the  con- 
ference was  to  study  the  means  of  establishing  a  fixed  relation 
between  the  value  of  the  two  metals,  and  the  proposed  declara- 
tion did  not  respond  to  this  object.  It  seemed  to  him  that,  in 
drafting  it,  special  care  had  been  taken  to  avoid  anything  that 
might  give  rise  to  a  hope,  even  the  most  vague,  of  a  future  un- 
derstanding. "  It  is,"  he  said,  "  limited  to  a  statement  that 
each  one  will  continue  to  do  at  home  everything  he  pleases. 
It  is  true,  a  recognition  is  made  that  silver  has  a  monetary 
function  to  perform  in  the  world.  But  what  value  can  this 
declaration  have  ?  Did  it  depend  upon  a  conference  to  ascer- 
tain such  a  fact  as  this? "  It  appeared  to  him  that  to  reach 
such  a  result  it  was  hardly  necessary  that  almost  all  the  states 


ITALY  ALONE  DISSENTS  247 

of  Europe  should  have  made  haste  to  accept  the  invitation  of 
the  United  States,  and  he  was,  therefore,  compelled  to  embody 
his  opinion  and  that  of  his  colleague  in  the  following: 

"  1.  That  by  the  adoption  of  the  formula  proposed  the  conference 
does  not  respond  to  the  question  which  was  put  to  it,  and  that  in 
systematically  avoiding  to  pronounce  itself  upon  the  possibility  or 
impossibility  of  a  fixed  relation  to  be  established  by  way  of  Interna- 
tional treaty  between  coins  of  gold  and  of  silver  it  leaves  its  task 
unfinished. 

"  2.  That  since  the  French  law  established  such  a  relation  be- 
tween the  two  metals,  the  oscillations  of  their  relative  value  had 
been  without  importance,  whatever  had  been  the  production  of  the 
mines. 

"  3.  That  consequently,  a  fortiori,  if  the  law  of  France  had  been 
alone  able  to  accomplish  the  result,  the  day  when  France,  England, 
and  the  United  States,  by  international  legislation,  should  agree  to 
established  together  the  relation  of  value  of  the  two  metals,  this  rela- 
tion would  be  established  upon  a  basis  so  solid  as  to  become  un- 
shakable." 

General  Walker  then  read  the  following  in  behalf  of  the 
American  delegates: 

"  In  response  to  the  address  of  the  representatives  of  the  Euro- 
pean states,  the  representatives  of  the  United  States  desire,  on  their 
part,  to  express  their  sincere  thanks  to  the  European  states  for  ac- 
cepting their  invitation  and  consulting  with  them  upon  a  subject  of 
so  much  importance. 

"  The  representatives  of  the  United  States  regret  that  they  cannot 
entirely  concur  in  all  that  has  been  submitted  to  them  by  a  majority 
of  the  representatives  of  the  European  states. 

"  They  fully  concur  in  a  part  of  the  first  proposition,  viz.:  that  '  It 
is  necessary  to  maintain  in  the  world  the  monetary  functions  of  silver 
as  well  as  those  of  gold,'  and  they  desire  that  ere  long  there  may  be 
adequate  co-operation  to  obtain  that  result.  They  cannot  object 
to  the  statement  that  '  the  selection  for  use  of  one  or  the  other  of 
these  two  metals,  or  of  both  simultaneously,  should  be  governed  by 
the  special  position  of  each  state  ';  but  if  it  be  necessary  to  maintain 
the  monetary  functions  of  both  metals,  as  previously  declared,  they 
respectfully  submit  that  special  positions  of  states  may  become  of 
but  secondary  importance. 

"  From  so  much  of  the  second  proposition  as  assigns  as  a  special 
reason  for  at  present  restricting  the  coinage  of  silver,  '  that  the 
disturbance  produced  during  the  recent  years  in  the  silver  market 
has  differently  affected  the  monetary  situation  of  the  several  coun- 
tries,' they  respectfully  dissent,  believing  that,  a  policy  of  action 
would  remove  the  disturbance  that  produced  these  inequalities. 

"  In  regard  to  the  third  and  last  proposition,  they  admit  that 
'  some  of  the  states  which  have  the  double  standard.'  or,  as  they  pre- 
fer to  say,  use  both  metals,  '  find  it  impossible  to  enter  into  a  mutual 
engagement  for  the  free  coinage  of  silver.'  They,  as  representa- 
tives of  the  United  States,  have  come  here  expressly  to  enter  into 


248  THE  CONFERENCE  OP  1878 

such  an  engagement.     The  difflculy  is  not  with  them;  and,  wherever 
it  may  be,  they  trust  it  may  be  soon  removed. 

"  They  entirely  concur  in  the  conclusion  drawn  from  this  state 
of  the  case,  that  '  it  excludes  the  discussion  of  the  question  of  the 
adoption  of  a  common  ratio  between  the  two  metals.'  It  is  use- 
less to  agree  upon  a  particular  ratio  between  the  two  metals  if  the 
nations  are  not  ready  also  to  adopt  a  policy  to  uphold  it.  We  re- 
main upon  ours,  the  European  states  upon  theirs." 

No  one  expressed  any  desire  to  further  prolong  the  discus- 
sion, and  thus,  on  August  29,  after  seven  sessions,  the  confer- 
ence of  1878  adjourned.  While  apparently  nothing  of  a  prac- 
tical nature  resulted,  the  cause  of  the  exclusive  gold  standard 
was,  nevertheless,  appreciably  weakened,  and  that  of  bimetal- 
lism somewhat,  if  not  correspondingly  increased.  The  attitude 
of  the  nations  was  very  different  from  that  taken  in  1867,  when 
all  were  for  the  gold  basis,  and  only  a  Dutch  delegate  had  mis- 
givings as  to  the  economic  effects  of  its  general  adoption.  No 
delegate  in  1867  favored  a  double  standard,  or  considered  it 
economically  possible.  In  1878,  only  the  delegates  of  Bel- 
gium and  the  Scandinavian  states  considered  the  general  adop- 
tion of  the  gold  standard  as  either  desirable  or  possible.  Eng- 
land regarded  it  as  Utopian,  Switzerland  admitted  that  only 
advanced  nations  could  afford  it,  while  France,  Holland,  and 
Austria,  though  deeming  the  adoption  of  bimetallism  imprac- 
ticable then,  favored  it  as  the  object  to  be  sought  in  the  future. 
The  United  States  and  Italy  desired  its  immediate  adoptioa 
This  was  undoubtedly  a  distinct  gain. 

The  economic  results  of  the  artificially  created  demand  for 
gold  had  not  yet  manifested  themselves  so  appreciably  as  to 
suggest  all  of  the  arguments  for  international  bimetallism. 
The  fall  in  prices  was  yet  largely  theoretical.  Statistics  were 
incomplete,  and  the  few  attempts  made  in  the  conference  to  de- 
monstrate the  fall  were  inconclusive.  But  the  leading  advo- 
cates of  gold  discarded  their  argument  of  a  few  years  before 
concerning  the  ample  supply  of  gold.  The  impossibility  of 
maintaining  it  had  been  demonstrated  by  some  unpleasant  ex- 


TUB  FAILURE  OF  TUB  CONFERENCE  249 

perienccs  in  the  banks  of  issue,  and  it  was,  therefore,  necessary 
to  make  more  of  the  argument  for  the  division  of  the  world 
into  groups  according  to  their  commercial  development  —  an 
argument  incapable  of  enduring  close  scrutiny. 

The  two  serious  obstacles  to  the  accomplishment  of  def- 
inite results  in  the  conference  were  the  non-participation  of 
Germany  and  the  uncertainty  as  to  the  future  course  of 
events  in  the  United  States.  Their  legitimate  offspring  was 
the  "  attitude  of  expectancy."  With  German  silver  in  the 
market,  the  Latin  Union  could  not  reopen  its  mints,  and  in  all 
probability  it  would  not  care  to  do  so,  should  the  United  States 
freely  open  theirs,  either  independently  or  in  co-operation  with 
governments  outside  of  Europe,  for  it  would  never  consent  to 
the  adoption  of  the  American  ratio  and  recoin  its  enormous 
mass  of  silver;  nor  could  it  reopen  its  mints  without  adopting 
the  American  ratio,  for,  there  being  3  per  cent,  difference,  all 
the  silver  would  have  gone  to  the  Latin  Union  for  coinage,  and 
its  gold  would  have  gone  to  the  United  States  and  Germany. 
With  Europe  in  this  attitude  all  negotiations  were  useless. 


CHAPTER  VI 

SERIOUS  LOSS  OF  GOLD  BY  EUROPEAN  BANKS  OF  ISSUE  —  THE  CONFER- 
ENCE OF  1881 

THE  failure  of  the  conference  was  a  great  disappointment 
to  the  American  delegates,  whose  expectations  had  been  un- 
reasonably high,  but  it  was  evidently  due,  in  a  large  measure, 
to  the  legislative  blunder  of  February,  1878  —  the  law  which 
created  them  and  provided  for  the  conference.  Leaving  the 
future  welfare  of  bimetallism  out  of  the  question,  and  consider- 
ing that  act  simply  as  legislation  for  domestic  ends,  it  could 
not  be  called  a  blunder,  for,  although,  as  a  means  of  providing 
a  subsidiary  silver  currency  it  was  wrong  in  principle,  and, 
therefore,  dangerous  if  persisted  in,  its  immediate  effects  were 
helpful  to  business,  and  even  to  successful  resumption.  But 
it  was  a  blunder  from  a  bimetallic  standpoint,  not  so  egregious 
as  the  free  coinage  of  silver  would  have  been  under  the  cir- 
cumstances, but  serious  enough  to  place  the  European  nations 
in  an  attitude  of  expectancy  —  the  expectation  of  possible 
relief  or  safe  escape  through  silver  coinage  in  the  United 
States  from  their  own  situation  of  increasing  embarrassment. 
What  made  this  blunder  all  the  more  deplorable  from  a  bi- 
metallic standpoint  was  the  fact  that  the  prospects  of  an  in- 
ternational agreement  decreased  in  the  proportion  that  the 
United  States  coined  silver  at  the  ratio  of  16  to  1,  thereby  in- 
creasing the  difficulty  of  recoinage,  inevitable  in  such  an  agree- 
ment. 

Hardly  had  the  conference  of  1878  closed  when  the  Euro- 
pean governments  began  to  be  seriously  alarmed  over  a  diffi- 


LOW  RESERVE  IN  THE  BANK  OP  ENGLAND  251 

culty  to  acquire  and  to  keep  gold  in  the  banks  of  issue.  They 
were  painfully  aware  that,  under  prevailing  commercial  condi- 
tions, a  succession  t)f  bad  harvests  at  home  and  of  good  ones 
in  America  would  necessitate  large  payments  to  us  in  gold, 
unless  they  could  increase  their  exports  of  merckandise,  or 
we  gave  them  the  privilege  of  paying  us  in  their  silver.  Our 
tariff  being  protective,  and  our  developing  manufactures  sup- 
plying more  and  more  of  our  needs,  Europe  was  discovering 
that  its  payments  for  breadstuffs  presented  a  serious  problem. 
For  some  time  the  leading  banks  had  been  compelled  to  main- 
tain high  rates  of  discount  to  keep  their  reserves  intact.  Money 
was  generally  abundant,  but  business  was  dull,  a  state  of  things 
which  naturally  would  tend  to  the  accumulation  of  specie  in 
the  banks. 

At  the  time  of  the  adjournment  of  the  conference,  the  re- 
serve in  the  Bank  of  England  stood  at  £8,603,000,  but  Octo- 
ber, and  not  August,  was  the  usual  month  for  low  reserves. 
The  average  for  August  and  'October  for  each  year  from  1871 
to  1877,  inclusive,  had  been  as  follows: 

1871, 

1872, 
1873, 
1874, 
1875. 
1870. 
1877, 

The  bank  was  not,  therefore,  in  a  good  condition  to  meet 
the  later  demand,  but  by  maintaining  a  discount  rate  of  5 
,  per  cent.,  it  succeeded  for  a  time  in  preventing  a  further  de- 
pletion. During  the  autumn,  the  price  of  certain  railroad 
stocks  largely  held  in  England,  notably  the  Erie,  advanced 
rapidly  in  New  York  under  the  influence  of  a  speculative  fever, 
and  foreign  investors  made  heavy  sales  to  realize  the  profits. 
This  helped  England  to  balance  accounts,  and  enabled  the 
bank  to  maintain  its  reserve  until  the  tide  turned,  but  even 


August. 
£15,186,000 

October. 
£9,467,000 

12,139.000 
13,005,000 

8,618,000 
9,573.000 

10,672,000 
15,696,000 
20,362,000 
12,293,000 

9,812,000 
10,987,000 
16,290,000 
9,589,000 

252  THE  CONFERENCE  OF  1881 

then  it  attracted  only  moderate  amounts  from  abroad.     The 
B  ullionist,  in  an  article  on  the  state  of  trade,  said: 

"  Of  late  we  have  had  a  very  sharp  reminder,  in  our  inability  to 
attract  gold  to  our  shores,  that  an  ounce  of  fact  is  more  potent  than 
a  pound  of  theory.  At  a  time  when  money  here  has  grown  rapidly 
dearer  and- is  double  in  value  what  it  is  in  some  other  European 
centres,  we  find  ourselves  unable  to  bring  here  the  supply  of  capital 
of  which  we  so  greatly  stand  in  need.  The  truth  is,  our  indebtedness 
to  other  countries  has  assumed  such  large  proportions  that  we  are  no 
longer  in  a  position  to  command  supplies  of  gold  as  we  once  could." 

An  article  in  the  treaty  of  the  Latin  Union  of  1865  pro- 
vided that  if  notice  of  dissolution  were  not  given  before  Janu- 
ary 1,  1879,  the  treaty  should  remain  in  force  for  fifteen  years, 
from  January  1,  1880.  A  large  party  in  France  had  for  some 
time  considered  the  union  disadvantageous  to  their  country, 
as  the  silver  from  the  other  states  worked  its  way  into  French 
provinces,  and,  finally,  into  the  reserves  of  the  bank.  Nearly 
all  the  silver  coined  in  Italy  quickly  passed  into  France,  and 
the  government  determined  to  bring  the  question  of  the  dis- 
solution of  the  union  before  the  plenipotentiaries  of  the  differ- 
ent states.  A  conference  was  called  and  assembled  at  Paris 
late  in  October.  The  smaller  states  were  strongly  opposed  to 
the  dissolution,  realizing  that  they  might  be  required  to  re- 
deem their  exported  silver  coins,  and  they  also  objected  to  any 
definite  arrangement  for  the  redemption  of  their  coins  while 
•the  union  was  continued,  though  strongly  urged  by  France  to 
do  so.  An  agreement  was  finally  reached  on  a  new  treaty, 
continuing  the  union  in  all  that  related  to  the  fineness,  weight, 
denomination,  and  currency  of  the  gold  and  silver  coins,  but 
providing  for  the  suspension  of  the  coinage  of  silver  5-franc 
pieces  to  be  resumed  only  upon  a  unanimous  agreement  of  the 
states.  The  treaty  was  to  remain  in  force  but  eight  years. 
France  was  thus  left  to  bear  the  burden  of  the  depreciation  of 
silver;  Belgium  and  Switzerland,  which  had  urged  the  adop- 
tion of  the  gold  standard  in  conferences,  being  unwilling  to 
effect  the  speedy  redemption  of  their  own  silver  issues,  and 
Italy  being  unable  to  do  so. 


ALL  EUROPEAN  MINTS  CLOSED  TO  SILVER  353 

Meanwhile  the  finances  of  the  German  empire  were  far 
from  satisfactory.  The  Reichsbank,  desperately  holding  to  its 
gold,  kept  its  rate  of  discount  at  5  per  cent,  during  1878,  and 
by  selling  silver  accumulated  a  large  amount  of  gold  for  the 
government.  But  every  sale  occasioned  a  heavy  loss  to  the  im- 
perial treasury.  It  was  reported  in  February,  1879,  that  the 
deficit  in  the  imperial  revenues  amounted  to  70,000,000  marks, 
and  the  Prussian  deficit  was  78,000,000  more.  This  was  in 
strong  contrast  to  the  United  States,  which  were  paying  off 
their  debt  rapidly,  selling  abroad  more  than  they  purchased 
and  accumulating  a  surplus.  A  sentiment  antagonistic  to  the 
monetary  reform  began  to  manifest  itself  all  over  the  empire. 
In  March  the  Berlin  Borsen-Zcitwiy  urged  the  government 
to  coin  into  small  change  £5,000,000  of  the  old  silver  on  hand, 
which,  it  said,  was  one-half  of  the  amount  still  to  be  withdrawn 
from  circulation,  on  the  ground  that  it  would  prevent  a  great 
loss  to  the  government  without  interfering  with  the  plan  of 
currency  reform.  Silver  was  then  quoted  at  49(Z. 

The  only  European  mints  remaining  open  to  silver  at  this 
time  were  those  of  Austria-Hungary.  During  the  latter  part 
of  1878  and  the  first  quarter  of  1879  the  imports  of  silver  into 
that  empire  were  very  large,  and,  as  the  low  price  of  the  metal 
made  it  profitable  to  send  it  to  the  mints  of  Vienna  and  Krem- 
nitz,  private  persons  availed  themselves  of  the  opportunity 
very  extensively.  As  the  coins  flowed  out  from  the  mints, 
and  as  the  price  of  silver  fell,  the  premium  on  the  metal  grad- 
ually decreased  and  finally  disappeared.  It  would  have  been 
easy  then  for  the  government  to  have  resumed  specie  pay- 
ments on  a  silver  basis,  and  it  was  advised  to  do  so.  But  it  re- 
fused, and  discontinued  the  coinage  of  silver  instead,  con- 
sidering gold  indispensable  for  specie  payments  in  the  existing 
attitude  of  Europe.  Thus,  by  March,  1879,  silver  was  de- 
barred from  every  mint  in  Europe,  where  six  years  before,  in 
1873,  it  was  coined  to  the  value  of  about  $90,000,000.  The 


254  THE  CONFERENCE  OF  1881 

price  of  silver  at  once  fell  to  48d.  Every  point  it  fell  added 
to  the  difficulties  of  the  other  countries  —  England  through 
Indian  exchange,  France  through  depreciation  of  the  currency 
of  its  people  and  the  reserves  of  its  bank,  Germany  by  adding 
to  the  loss  of  every  ounce  it  sold,  as  well  as  to  the  depreciation 
of  every  thaler  it  was  compelled  to  keep. 

Even  before  this  drop  the  commercial  boards  of  London 
had  been  studying  the  problem  of  advancing  the  price  of  sil- 
ver in  the  interests  of  India  —  and  of  themselves.  Late  in 
February,  1879,  a  memorial  was  prepared  and  extensively 
signed  by  merchants  and  bankers  trading  with  the  East,  pro- 
posing a  plan  for  relief.  It  recognized  as  among  the  causes 
of  the  decline  in  the  price  of  silver  the  extensive  drawing  of 
India  council  bills,  and  suggested  that  the  causes  of  the  de- 
cline might  be  greatly  mitigated  by  reducing  the  drawings,  say 
£5,000,000  per  annum  for  each  of  two  years,  and  by  borrow- 
ing temporarily  in  England  an  equal  amount  (£10,000,000)  to 
provide  for  the  requirements  of  the  Indian  government.  It 
was  held  that  the  immediate  effect  of  the  measure  would  be  to 
raise  the  exchanges,  relieve  the  market  from  the  incubus  of  the 
German  supply  of  silver,  and  consequently  of  the  loss  occa- 
sioned by  the  drawings,  while  later,  with  a  revival  of  trade, 
the  loan  could  be  repaid  from  India  by  a  slight  increase  of  the 
yearly  drawings  of  council  bills.  The  memorialists  figured 
the  salable  stock  of  German  silver  at  £10,000,000,  and  seem 
to  have  had  the  impression  that  a  reduction  of  the  India  draw- 
ings to  that  amount  would  restore  the  normal  conditions.  The 
government  considered  the  project  favorably,  and  on  March 
28  a  bill  was  introduced  into  Parliament  asking  for  authority 
to  borrow  the  amount,  instead  of  drawing  council  bills,  which 
were  at  20  per  cent,  discount,  and,  therefore,  imposing  a  heavy 
burden  on  the  Indian  government.  The  price  of  silver  ad- 
vancing a  little  on  the  strength  of  this,  Germany  at  once 
dropped  half  a  million  dollars'  worth  on  the  market. 


INCREASED  DEPRESSION  IN  TRADE  255 

On  account  of  the  continued  distress  in  India,  great  press- 
ure was  brought  upon  the  government  to  take  other  steps  to 
enhance  the  value  of  silver.  On  April  4  a  deputation  from 
one  of  the  most  influential  bodies  in  England,  the  Liverpool 
Chamber  of  Commerce,  waited  upon  the  Chancellor  of  the 
Exchequer,  and  urged  the  adoption  of  measures  to  that  end. 
There  was  a  very  uneasy  feeling  about  some  of  the  banks  en- 
gaged in  Eastern  transactions.  The  stock  of  the  Chartered 
Bank  of  India  and  Australia  had  fallen  25  per  cent. ;  the  Hong- 
Kong  and  Shanghai  stock  had  depreciated  33  per  cent.,  while 
stocks  of  some  institutions  had  fared  still  worse.  The  old  Ori- 
ental, the  par  value  of  whose  shares  was  £20,  and  the  market 
value  of  which,  in  its  prosperous  days,  had  ruled  above  £45, 
was  quoted  in  April  at  £14^,  a  reduction  of  more  than  75  per 
cent.  The  president  of  the  Chartered  Bank  of  India  made  a 
statement  to  the  effect  that,  a  year  before,  the  bank  had  been 
informed  from  America,  that  a  very  considerable  rise  in  silver 
was  imminent  on  account  of  the  passage  of  the  Bland  Bill,  and 
it  was  thought  advisable  to  make  a  large  purchase.  The  bank 
lost  £45,000  by  the  operation. 

Meanwhile  the  general  depression  in  trade  was  becoming 
more  intense,  and  the  effect  was  felt  nowhere  so  keenly  as  in 
England.  The  United  States  were  prosperous,  and  France 
was  fairly  so,  but  elsewhere  in  Europe  industries  were  in  a 
very  low  state.  It  caused  money  to  be  cheap,  and  enabled  the 
Bank  of  England  to  replenish  its  reserve,  so  that  its  rate  fell 
to  2 1,  and  that  of  the  Reichsbank  was  dropped  for  a  time  to 
3  per  cent.  But  in  other  respects  the  business  conditions 
weighed  heavily.  "  That  the  country  is  in  a  state  of  indus- 
trial depression  seldom  equalled  is  what  Her  Majesty's  govern- 
ment do  not  deny,"  said  Disraeli,  the  Prime  Minister,  one  April 
evening  in  the  House  of  Lords.  The  results  of  the  failure  of 
the  City  of  Glasgow  Bank  and  of  the  "West  of  England  Bank 
were  proving  serious  on  the  shares  of  all  banks;  the  shrinkage 


256  THE  CONFERENCE  OF  1881 

in  the  value  of  bank  shares  in  England  and  Scotland  was  esti- 
mated to  aggregate  £34,444,000.  The  foreign  trade  of  the 
United  Kingdom  offered  no  compensating  encouragement. 
England  was  suffering  severely,  and  the  number  of  those  who 
considered  •  the  decline  of  silver  as  the  prime  cause  of  the 
trouble  was  rapidly  increasing.  This  was  an  appropriate  time 
for  Congress,  in  the  interests  of  silver,  to  allow  the  United 
States  quietly  to  reap  the  fruits  of  their  prosperity,  and  let 
Europe  solve  the  problems  of  its  unpleasant  situation  in  the 
light  of  the  possibilities  of  bimetallism.  But  by  a  curious 
fatality,  often  exemplified  later,  it  was  the  time  taken  by  one 
branch  of  Congress  to  pass  a  bill  for  the  free  coinage  of  sil- 
ver. The  Forty-sixth  Congress  began  its  career  with  an  extra 
session,  March  18.1  A.  J.  Warner,  of  Ohio,  at  once  introduced 
a  bill  amending  the  statutes  so  as  to  provide  for  free  coinage, 
and  it  was  referred  to  the  coinage  committee,  of  which  he  was  a 
member.  He  reported  it  on  the  30th  of  April,  and  after  a 
stubborn  resistance  it  was  passed  on  May  24,  by  114  yeas  to 
97  nays.  All  those  voting  for  the  bill  were  Democrats  and 
Greenbackers  except  four;  all  voting  against  it  were  Republi- 
cans except  eight.  It  went  to  the  Senate,  and  was  referred  to 
the  Finance  Committee,  of  which  Senator  Bayard  was  chair- 
man. 

This  had  its  natural  effect  in  Europe,  in  its  attitude  of  ex- 
pectancy. Germany  at  once  discontinued  its  sales  of  silver, 
though  the  price  was  ruling  somewhat  higher  than  at  the  time 
of  some  of  her  sales.  She  deemed  it  best  to  wait  for  the 
American  mints  to  open.  Up  to  this  time  Germany  had  with- 
drawn from  circulation  about  1,000,000,000  marks  in  old 
coins  of  the  several  states.  Of  this,  380,000,000  marks  had 
been  delivered  to  the  mints  for  coinage  into  new  imperial  silver 
coins,  and  the  remainder  had  been  melted  into  bars  producing 

i  "  For  the  first  time  since  the  Congress  that  was  chosen  with  Mr. 
Buchanan  in  1S."0,  the  Democratic  party  was  in  control  of  both 
branches."  —  Elaine's  Twenty  Years  of  Congress. 


PROGRESS  OP  GERMAN  MONETARY  REFORM  257 

7,474,644  pounds  of  fine  silver.  Of  this,  7,104,896  pounds 
had  been  sold  at  prices  varying  from  59fyd.  in  1873,  to  50(Z. 
in  1879,  the  average  being  53ff<7.  By  a  comparison  of 
the  product  of  these  sales,  567,139,993  marks,  with  the  orig- 
inal cost  of  the  silver,  which  had  been  taken  at  663,621,109 
marks,  it  is  apparent  that  Germany  made  her  sales  at  a  loss  to 
the  empire  of  96,481,136  marks,  or  about  $23,000,000.  In 
addition  to  this,  the  expenses  of  carrying  out  the  monetary  re- 
form (coinage,  interest  on  the  capital  employed  in  running 
the  workshops  of  the  mints  etc.)  were  reckoned  at  29,316,438 
marks,  making  the  total  expense  125,797,574  marks.  Against 
this  the  government  reckoned  profits  from  the  mintage  of  the 
gold  and  silver  imperial  coins,  bonuses,  etc.,  of  81,728,134 
marks,  leaving  a  balance  to  be  met  by  the  imperial  treasury  for 
the  six  years'  operations  of  44,069,440,  or  about  two-thirds  of 
the  imperial  deficit  reported  in  March.  But  there  were  still. 

left  in  circulation  old  silver  thalers  and  Austrian  thalers  to 

> 

the  amount  of  about  450,000,000  marks.  The  plan  of  the 
reform  as  originally  laid  out  included  the  retirement  and  de- 
monetization of  these  coins,  but  when  the  sales  stopped  only 
614,000,000  marks  of  the  total  had  been  called  in.1  The  old 
silver,  still  in  circulation  at  full  legal  tender,  therefore,  still 
exceeded  the  new  imperial  silver  coinage,  which  was  legal  ten- 
der to  only  20  marks  between  individuals.  It  was  evident  to 
the  government  that  the  reform  could  not  be  completed  on  a 
declining  silver  market  without  a  further  net  loss  of  at  least 
40,000,000  marks.  In  this  situation  Germany  could  not  fail 
to  pause  and  regard  with  hopeful  expectancy  the  results  of 
the  passage  of  another  free  silver  bill  in  the  House  of  Repre- 
sentatives at  Washington. 

France  and  England  watched  events  in  Congress  with  quite 

i  These  fijrnres  are  taken  from  the  statement  made  by  Baron  Von 
Thielmann,  the  German  delegate  to  the  conference  of  1881.  and 
were  from  official  German  sources. 

17 


258  THE  CONFERENCE  OF  1881 

as  much  interest.  "Writing  from  London  on  May  24,  the  day 
the  bill  passed  the  House,  the  foreign  agent  of  our  Treasury 
Department  in  our  refunding  operations  said: 

"  There  is  quite  a  large  class  of  merchants  and  manufacturers  here 
who  are  interested  in  India,  who  wish  us  to  adopt  the  extreme 
measures  of  the  silver  inflationists,  and  France  would  be  only  too 
glad  to  have  us  adopt  free  coinage.  It  would  open  up  a  way  for 
her  to  escape  from  the  difficulties  and  embarrassments  she  now 
finds  herself  in  through  her  membership  with  the  Latin  Union. 
Italy  has  coined  vast  sums  of  small  silver  coins,  and  has  used  them 
in  the  payment  of  the  interest  on  her  debt;  in  fact,  it  is. believed 
they  were  partly,  if  not  wholly,  coined  for  that  purpose.  France  is 
flooded  with  silver  which  has  found  its  way  there  from  the  several 
states  of  the  Latin  Union,  and  every  visitor  to  Paris  during  the  last 
two  years  will  testify  to  the  general  complaints  of  the  abundance  of 
silver.  Its  circulation  is  forced.  Traders  and  small  retail  dealers 
make  every  exertion  to  force  it  upon  their  customers  in  returning 
change.  People  were  greatly  surprised  and  astonished  a  few  days 
ago  by  the  announcement  that  of  the  £87,872,000  which  the  Bank 
of  France  reported  as  cash  assets,  over  £40,000,000  of  it  was  in  silver 
coin The  solution  of  the  silver  question  is  a  difficult  prob- 
lem for  France.  If  our  people  wish  to  take  upon  their  shoulders  the 
burdens  of  India,  Italy,  France,  and  some  of  the  poorer  states,  they 
can  do  it  by  establishing  free  coinage  in  the  United  States." 

Mr.  Evarts,  the  Secretary  of  State,  was  favorable  to  the 
calling  of  another  international  conference,  but  the  plan  was 
not  considered  expedient  so  soon  after  the  conference  of  the 
year  before.  It  was,  however,  much  discussed  by  the  admin- 
istration, and  a  close  watch  was  kept  on  events  abroad.  Little 
pertaining  to  the  situation  was  transpiring  then,  except  the 
debates  in  Parliament  on  the  continual  deficits  in  the  Indian 
budget,  and  the  increasing  industrial  depression  at  home.  A 
Royal  Commission  was  appointed  to  investigate  the  matter. 
The  French  government  was  discussing  the  expediency  of  re- 
coining  silver  into  trade  pieces  to  be  used  in  Cochin-China, 
and  a  similar  proposition  was  under  consideration  by  the  Ger- 
man Federal  Council  as  a  means  of  working  off  some  of  the  old 
silver. 

On  June  17,  while  the  Free  Silver  Bill  was  still  in  the 
hands  of  the  Finance  Committee  of  the  Senate,  Senator  Vest 
introduced  a  resolution  "  that  the  complete  remonetization 


EFFECT  OF  SHORT  CROPS  IN  EUROPE  259 

of  silver,  its  full  restoration  as  a  money  metal,  and  its  free 
coinage  by  the  mints  of  the  United  States  are  demanded  alike 
by  the  dictates  of  justice  and  wise  statesmanship."  It  was 
referred  to  the  Finance  Committee  by  a  vote  of  23  to  22,  and 
was  not  again  heard  of;  but  just  before  the  adjournment  of  the 
session  on  July  1,  the  Finance  Committee  reported  adversely 
on  the  Free  Silver  Bill,  and  it  was,  therefore,  killed  for  the 
time,  thus  destroying  the  immediate  hopes  of  the  distressed 
European  states. 

During  the  summer  a  gloom  settled  down  on  their  finan- 
cial affairs.  The  harvests  were  again  inadequate,  and,  in  Eng- 
land, were  almost  a  failure.  A  large  importation  of  wheat 
from  the  United  States  seemed  inevitable,  and  the  question 
of  how  it  should  be  paid  for  attracted  considerable  attention. 
Most  of  our  bonds  remaining  abroad  were  held  as  permanent 
investments;  payments  for  grain  could  not,  therefore,  be 
made,  as  in  the  two  previous  years,  by  the  mutual  surrender 
of  our  securities  on  the  market.  Some  encouragement  was  de- 
rived from  the  argument  that  the  prosperity  of  the  United 
States  would  soon  so  raise  wages,  and  thereby  so  increase  the 
cost  of  our  manufactured  productions,  as  to  largely  remove 
competition  with  the  manufactures  of  Europe,  even  with  our 
high  tariff.  This  argument  contains  some  food  for  thought 
for  those  who  are  wont  to  deny  that  a  protective  tariff  does 
not  aid  us  in  the  maintenance  of  a  gold  reserve,  and,  therefore, 
assist  in  preserving  the  redemptive  features  of  our  currency. 

The  movement  of  gold  from  London  and  Paris  to  ISTew 
York  began  early  in  August.  The  Bank  of  England  was  in  a 
better  position  than  in  1878,  having  accumulated  a  comfort- 
able stock  of  gold  in  various  ways;  but  the  Bank  of  France 
was  seriously  embarrassed,  not  so  much  by  a  lack  of  gold,  as 
by  a  disproportionate  amount  of  silver.  The  following  table 
shows  the  change  that  had  gradually  been  taking  place  in  its 
bullion  since  1874: 


Gold. 

Silver. 

Total. 

£40,484,000 

£12,528,000 

£53,012,000 

46,972,000 

20,200,000 

67,172,000 

61,216,000 

25,544,000 

86,760,000 

47,084,000 

34,616,000 

81,700,000 

39,344,000 

42,324,000 

81,668,000 

260  THE  CONFERENCE  OF  1881 

1874, 

1875, 
1876, 

1877, 
1878,       . 

The  amount  of  silver  in  the  autumn  of  1879  was  about 
the  same  as  that  of  1878,  but  the  stock  of  gold  was  rapidly 
falling,  and,  while  larger  than  that  in  the  Bank  of  England, 
the  notes  of  the  former  were  issued  against  both  the  gold  and 
silver,  and  of  the  latter  only  against  gold.  The  situation 
caused  the  French  government  much  uneasiness,  and  its  at- 
titude was  rapidly  changing  from  that  of  expectancy  to  one 
of  determination  to  act.  It  began  to  sound  the  American 
government  on  the  subject  of  another  conference.  A  few 
months  had  changed  its  ideas  as  to  the  premature  character 
of  the  propositions  made  to  the  last  conference.  Had  the 
Bland-Allison  Act  not  been  in  operation  then,  our  business 
activity  would  have  created  a  sharp  demand  for  gold  in  our 
currency,  and  made  international  bimetallism  an  immediate 
probability. 

An  event  of  much  significance  occurred  in  England  about 
this  time.  Henry  H.  Gibbs,  an  ex-governor  and  one  of  the 
directors  of  the  Bank  of  England,  who  had  maintained  the 
gold  monometallic  position  of  his  government  at  the  confer- 
ence of  1878,  announced  his  conversion  to  bimetallism  in  an 
ably  written  pamphlet  published  with  the  sanction  of  the 
governor  of  the  bank.  He  affirmed  the  superiority  of  the  bi- 
metallic system  to  the  English  system,  and  strongly  advocated 
a  general  restoration  of  the  free  coinage  of  silver.  This  was 
not  simply  an  indication  of  the  impression  the  course  of  events 
was  making  on  the  directors  of  the  bank,  but  upon  British 
opinion  generally.  The  bank  was  obliged  to  maintain  a  high 
rate  of  discount,  although  money  was  so  plenty  that  it  could 
be  borrowed  on  good  securities  in  the  market  as  low  as  -J  per 


EFFECT  OF  EUROPE'S  LOSS  OF  GOLD  281 

cent,  per  annum.1  The  Reichsbank  raised  its  rate  to  4  per 
cent,  early  in  October,  on  account  of  the  withdrawals  for  the 
United  States.  Pixley  &  Abell  estimated  that  the  total 
amount  of  gold  sent  from  England,  France,  and  Germany 
from  July  1  to  October  1  was  £10,500,000,  and  while  the  stock 
of  gold  was  diminishing  in  the  banks  of  the  two  latter  countries 
the  stock  of  silver  was  increasing.  Alfred  E.  Lee,  consul  at 
Frankfort,  in  a  communication  to  this  government,  in  Novem- 
ber, in  speaking  of  the  advance  of  discount  rates  of  the 
Bank  of  France  to  3,  and  the  bank  of  Germany  to  4  per  cent., 
said :  "  Yet  the  purchases  of  grain  are  still  far  from  being 
ended,  and  those  of  cotton  are  just  beginning.  What  the  re- 
sult of  all  this  will  be  can  only  be  guessed,  but  intelligent  men 
are  not  wanting  who  believe  that  the  banks  of  France,  Eng- 
land, and  Germany  may  be  obliged  to  advance  their  rate  to 
6  per  cent.,  or  even  higher,  and  that  a  financial  crisis  may  be 
impending  that  will  convulse  all  Europe." 

In  the  Saxon  Landtag  an  effort  was  being  made  to  pass  a 
resolution  asking  the  federal  council  to  reintroduce  the  double 
standard.  One  of  the  arguments  for  it  was  the  depreciation 
in  the  value  of  the  product  of  the  silver  mines  of  the  empire, 
that  of  the  Freiberg  mine  having  fallen  off  1,000,000  marks 
($238,000).  Among  the  other  early  indications  of  the  bime- 
tallic campaign  in  Germany  was  a  petition  of  the  Chamber  of 
Commerce  of  Schweinitz  and  Waldenburg  to  the  Landtag, 
in  favor  of  silver  restoration  because  of  the  injustice  of  paying 
debts  in  depreciated  coinage.  Obligations  were  being  dis- 
charged daily  in  legal-tender  silver,  of  which  $120,000,000 
was  still  in  circulation.  Thus,  German  security  holders,  as 
well  as  mine  owners,  had  reasons  for  desiring  the  restoration 
of  silver  in  the  currency  system.  When  the  sales  of  silver 
were  discontinued  the  government  ceased  to  acquire  gold,  and 

1  Conant  to  Secretary  Sherman,  Sept.  20,  1879. 


262  THE  CONFERENCE  OF  1881 

its  accumulated  stock  began  to  decline,  fully  £500,000  being 
withdrawn  for  America  by  December  1.  The  stock  of 
the  Bank  of  England  had  been  depleted  of  about  £4,000,- 
000,  and  that  of  the  Bank  of  France  of  about  £6,000,000, 
though  every  possible  step  was  taken,  especially  by  the  latter 
bank,  to  prevent  it.  The  tide  did  not  turn  in  favor  of  Europe, 
as  was  usual  at  this  season  of  the  year,  for,  while  the  imports 
of  gold  into  this  country  fell  off  for  a  time,  the  rate  of  ex- 
change prevented  exports,  and  early  in  1880  the  imports  began 
again. 

Scientific  opinion  turned  somewhat  tardily  to  the  careful 
consideration  of  the  appreciation  of  gold,  as  resulting  from 
its  scarcity,  and  the  consequent  effect  on  the  price  of  those 
commodities  measured  by  it.  But  in  1879  distinguished  au- 
thorities in  England  and  on  the  Continent  examined  the  sub- 
ject fully,  and  intensified  the  bimetallic  sentiment  by  at- 
tributing to  the  appreciation  of  gold  a  large  share  of  the  in- 
dustrial woes  of  the  times.  Prof.  J.  Thorold  Rogers,  of  the 
University  of  Oxford,  in  an  article  in  the  Princeton  Rcviciv 
upon  the  "  Causes  of  Commercial  Depression,"  held  that 
there  could  no  longer  be  a  doubt  that  prices,  wages,  and  profits 
were  falling  in  very  many  industries  before  prosperous,  and 
he  considered  "  the  first  cause  in  importance,  the  most  general 
and  in  all  probability  the  most  enduring,"  the  rapid  rise  in  the 
economical  value  of  gold.1  The  matter  was  more  elaborately 
treated  by  Robert  Giffen  and  others,  the  conclusion  in  each 
case  being  that  the  fall  in  prices  was  mainly,  if  not  wholly,  due 


1  "  The  writer  has  been  informed  by  those  who  are  best  competent 
to  Rive  an  opinion  that  no  traceable  rise  in  prices  has  occurred  in 
those  countries  which  use  a  silver  standard  only,  and  that  this  is 
particularly  the  case  in  India,  where  the  loss  which  the  government 
incurs  arises  from  the  necessity  of  meeting  liabilities  due  to  Eng- 
land in  a  currency  which  has  increased  in  costliness  by  all  the 
difference  between  the  old  and  the  present  value  of  silver  as  meas- 
ured by  gold."  —  Prof.  J.  Thorold  Rogers,  in  the  Princeton  Rcricw, 
January,  1879. 


PROSPERITY  IN  THE  UNITED  STATES  263 

to  the  appreciation  in  the  value  of  the  yellow  metal,  and  that 
the  effects  on  trade  both  at  home  and  abroad  had  been  disas- 
trous.1 But  the  contrary  opinion  was  stubbornly  maintained 
by  the  advocates  of  the  gold  standard,  both  in  England  and  on 
the  Continent.  There  was  no  more  conspicuous  supporter  of 
gold  in  France  than  Parieu,  who  had  taken  so  prominent  a 
part  in  the  conference  of  18G7,  and  who,  as  a  member  of  the 
Senate  was  opposing  the  steps  of  the  government,  which  by  this 
time  was  thoroughly  enlisted  in  behalf  of  international  bi- 
metallism, being  convinced  that  it  might  be  disastrous  to  delay 
longer  in  the  expectation  that  the  United  States  might  fool- 
ishly adopt  the  free  coinage  of  silver  on  their  own  account. 

The  Forty-Sixth  Congress  reassembled  on  December  1, 
with  the  financial  affairs  of  the  United  States  in  a  highly 
gratifying  state.  "  The  resumption  of  specie  payments,"  said 
President  Hayes  in  his  message,  "  has  been  followed  by  a  very 
great  revival  of  business.  With  a  currency  equivalent  in  value 
to  the  money  of  the  commercial  wTorld,  we  are  enabled  to  enter 
upon  an  equal  competition  with  other  nations  in  trade  and 
production.  The  increasing  foreign  demand  for  our  manu- 
factures and  agricultural  products  has  caused  a  large  balance 
of  trade  in  our  favor,  which  has  been  paid  in  gold  from  the 
1st  of  July  last  to  November  15,  to  the  amount  of  about  $59,- 
000,000.  Since  the  resumption  of  specie  payments  there  has 
also  been  a  marked  and  gratifying  improvement  of  the  public 
credit."  In  speaking  of  the  plan  for  another  conference  which 

1 "  The  '  moral '  of  much  that  has  been  said  is  clearly  this,  that, 
if  possible,  the  scarcity  of  gold  which  has  contributed  to  the  present 
fall  of  prices,  and  have  further  serious  effects  in  future,  should 
be  mitigated,  and  should. at  any  rate  not  be  aggravated  by  legisla- 
tive action Still  more  we  ought  to  deprecate  any  change 

in  silver-using  countries  in  the  direction  of  substituting  gold  for  any 
part  of  the  silver  in  use.  It  would  be  nothing  short  of  calamitous  to 
business  if  another  demand  for  gold  like  the  recent  demands  for 
Germany  and  the  United  States  were  now  to  spring  up.  Even  a 
much  less  demand  would  prove  rather  a  serious  affair  before  a  very 
long  time  elapsed."—  Robert  Giffen,  in  Journal  of  the  London  Statis- 
tical Society  for  March,  1879. 


264  THE  CONFERENCE  OF  1881 

had  been  the  subject  of  some  diplomatic  correspondence  be- 
tween France  and  the  United  States,  he  said : 

"  The  pendency  of  the  proposition  for  unity  of  action  between 
the  United  States  and  the  principal  commercial  nations  of  Europe 
to  effect  a  permanent  system  for  the  equality  of  gold  and  silver  in 
the  recognized  money  of  the  world,  leads  me  to  recommend  that 
Congress  refrain  from  new  legislation  on  the  general  subject.  The 
great  revival  of  trade,  internal  and  foreign,  will  supply  during  the 
coming  year  its  own  instructions,  which  may  well  be  awaited  be- 
fore attempting  further  experimental  measures  with  the  coinage. 
I  would,  however,  strongly  urge  upon  Congress  the  importance  of 
authorizing  the  Secretary  of  the  Treasury  to  suspend  the  coinage 
of  silver  dollars  upon  the  present  legal  ratio.  The  market  value  of 
the  silver  dollar  being  uniformly  and  largely  less  than  the  market 
value  of  the  gold  dollar,  it  is  obviously  impracticable  to  maintain 
them  at  par  with  each  other,  if  both  are  coined  without  limit.  If 
the  cheaper  coin  is  forced  into  circulation  it  will,  if  coined  without 
limit,  soon  become  the  sole  standard  of  value,  and  thus  defeat  the 
desired  object,  Avhich  is  a  currency  of  both  gold  and  silver,  which 
shall  be  of  equivalent  value,  dollar  for  dollar,  with  the  universally 
recognized  money  of  the  world." 

Secretary  Sherman  said  in  his  report: 

"  The  total  amount  of  silver  dollars  coined  to  Nov.  1,  1879,  under 
the  act  of  Feb.  28,  1878,  was  $45,206,200,  of  which  $13,002,842  was  in 
circulation,  and  the  remainder,  $32,203,358,  in  the  Treasury  at  that 
time.  No  effort  has  been  spared  to  put  this  coin  in  circulation. 
Owing  to  its  limited  coinage,  it  has  been  kept  at  par;  but  its  free 
coinage  would  soon  reduce  its  current  value  to  its  bullion  value,  and 
thus  establish  a  single  silver  standard.  The  inevitable  result  would 
be  to  exclude  gold  coin  from  circulation.  It  is  impossible  to  ascer- 
tain what  amount  of  silver  coin,  based  upon  the  ratio  of  16  of 
silver  to  1  of  gold,  can  be  maintained  at  par  with  gold,  but  it  is  mani- 
fest that  this  can  only  be  done  by  the  government  holding  in  its 
vaults  the  great  body  of  the  silver  coined.  It  would  seem  that  noth- 
ing would  be,  gained  by  an  unlimited  coinage  unless  it  is  desirable 
to  measure  all  values  by  the  silver  standard.  The  Secretary  cannot 
too  strongly  urge  the  importance  of  adjusting  the  coinage  ratio  of  the 
two  metals  by  treaties  with  commercial  nations,  and,  until  this  can 
be  done,  of  limiting  the  coinage  of  the  silver  dollar  to  such  a  sum 
as,  in  the  opinion  of  Congress,  would  enable  the  department  to 
readily  maintain  the  standard  dollars  of  gold  and  silver  at  par  with 
each  other." 

Congress  wisely  refrained  from  seriously  exploiting  its 
silver  sentiment  at  that  session,  and  the  Senate  declined  to 
take  np  the  "Warner  Bill  upon  an  adverse  report,  in  view  of  the 
probability  of  another  conference  in  the  near  future.  The  ad- 
ministration kept  a  close  watch  upon  the  course  of  events  in 
other  countries.  The  bimetallic  agitation  in  Germany  grew, 


GERMANY  HALTS  IN  ITS  REFORM  265 

and  the  government,  abandoning  hope  of  immediate  relief  by 
the  free  coinage  of  silver  in  this  country,  set  to  work  upon 
measures  of  its  own.  It  was  currently  reported  that  Germany 
would  remonetize  silver,  and  that  Bismarck  had  become  a  bi- 
metallist.  There  is  little  doubt  that  the  question  of  abandon- 
ing the  policy  of  its  monetary  reform  and  of  proceeding  on  the 
double  standard  was  seriously  considered  in  the  Berlin  cabinet, 
but  the  difficulties  led  only  to  temporary  measures.  The 
resumption  of  the  sales  of  silver  was  considered  impracticable, 
involving  as  it  did  a  heavy  increase  in  the  deficit  of  the  imperial 
treasury  at  a  time  when  taxes  were  high,  and  the  imposition  of 
new  taxes  was  dangerous  in  the  face  of  that  growth  of  socialism 
which  in  itself  was  becoming  a  serious  problem  for  the  Iron 
Chancellor.  In  April,  1880,  he  laid  before  the  Federal  Coun- 
cil a  bill  to  increase  the  coinage  of  imperial  silver  from  10 
marks  per  capita,  which  was  the  amount  provided  by  the  law 
of  1873,  to  12  marks.  In  his  report  upon  the  bill  he  gave 
statistics  to  show  that  the  silver  in  circulation  was  inadequate 
to  the  needs  of  the  people.  He  did  not  fear  that  this  would 
make  the  supply  too  large,  and  called  attention  to  the  safe- 
guards against  an  oversupply.  The  increase,  he  said,  would 
furnish  the  wished-for  opportunity  for  recoining  the  silver 
which  had  accumulated  in  the  hands  of  the  government,  and 
which  he  valued  at  31,000,000  marks.  The  report  also 
stated  that  the  5-inark  notes  did  not  seem  to  be  appreciated 
by  the  public,  and  it  proposed  that  their  circulation  be  re- 
duced from  46,122,210  marks  to  40,000,000.  "  It  appears," 
said  Andrew  D.  White,  Minister  to  Germany,  writing  to  Sec- 
retary Evarts  at  the  time,  "  that  the  German  government  is 
gradually  reverting  to  an  extensive  use  of  silver,  which,  in 
1873,  it  was  supposed  to  have  permanently  discarded." 

It  is  extremely  doubtful  if  this  increase  per  capita  in  the 
silver  coinage  would  have  suggested  itself  to  the  government 
but  for  the  opportunity  it  afforded  for  using  the  silver  on 


266  THE  CONFERENCE  OF  1881 

hand  without  incurring  the  loss  of  putting  it  on  the  market. 
An  increase  of  two  marks  per  capita  would  call  for  a  further 
coinage  of  about  115,000,000  marks  on  the  basis  of  the  popu- 
lation of  the  empire  at  that  time,  and  this  would  not  only  have 
absorbed  the  bar  silver  still  in  the  hands  of  the  government, 
but  some  70,000,000  marks  besides,  on  which  the  loss  might 
have  been  saved  had  the  step  suggested  itself  before  it  was  sold. 
The  increase  of  the  circulation  was  apparently  only  an  excuse, 
for  it  could  not  be  increased  that  amount  except  by  coining 
bars.  Calling  in  old  thalers  and  recoining  them  into  im- 
perial marks  would  be  changing  only  the  denomination  of  the 
coin  without  affecting  the  amount  in  circulation,  except  to 
reduce  it  while  the  operation  was  in  progress.  The  intention 
probably  was,  to  not  only  consume  the  unsold  bar  silver  in  new 
coinage,  but  to  relieve  the  bullion  stock  of  the  Reichsbank  of 
its  oversupply  of  silver,  at  the  same  time  reducing  the  note  cir- 
culation as  proposed.  It  was  currently  reported  that  silver 
represented  about  two-thirds  of  the  bullion  of  the  imperial 
bank  at  that  time. 

The  problem  was  extensively  discussed  in  Germany  dur- 
ing the  remainder  of  1880.  Bimetallism  mustered  the  strong- 
est economic  authorities,  such  as  Wagner,  Schaefflc,  Lexis,  and 
Arendt.  It  was  defended  in  the  Reichstag  by  several  mem- 
bers, including  one  of  the  leaders,  Von  Kardorff.  The  views 
of  Bismarck  were  supposed  to  have  been  reflected  by  one  mem- 
ber, an  interpreter  of  the  Chancellor's  policy,  when  he  com- 
pared the  mass  of  gold  in  circulation  in  the  world  to  a  too 
scanty  blanket  on  a  bed  occupied  by  more  than  one  person,  each 
trying  to  pull  as  much  of  the  blanket  as  possible  over  himself. 
The  German  agriculturists  in  their  annual  congress  de- 
manded bimetallism,  and  it  was  endorsed  at  numerous  public 
meetings.  It  became  very  evident  that  the  German  govern- 
ment would  not  care  to  decline  to  participate  in  another  inter- 
national conference.  To  add  to  its  difficulties,  the  gold  which 


FRANCE  SUFFERS  SEVERELY  267 

had  been  accumulated  at  so  great  a  loss  on  its  silver  began  to 
leave  it  in  the  fall  of  that  year. 

The  English  government  was  met  by  a  rising  tide  of  protest 
against  prevailing  conditions.  The  Chambers  of  Commerce 
of  Liverpool  and  Birmingham  endorsed  the  plan  of  interna- 
tional bimetallism,  bankers  and  merchants  at  Manchester  and 
London  petitioned  for  it,  and  a  large  portion  of  the  directory 
of  the  Bank  of  England  either  favored  it  openly  or  were  half 
inclined  to.  Though  the  bank  had  been  more  successful  in 
acquiring  gold  during  1880  than  the  Bank  of  France  and  the 
Reichsbank,  the  withdrawals  for  America  required  it  to  take 
unusual  precautions,  none  of  them  profitable  to  the  bank  or 
helpful  to  general  business. 

But  no  country  was  being  harder  hit  than  France.  In 
1876  she  imported  598,000,000  of  francs  in  gold;  in  1880, 
only  194,000,000  of  francs.  In  1876,  she  exported  only  94,- 
000,000  of  francs;  in  1880,  she  exported  413,000,000.  The 
composition  of  the  stock  of  the  Bank  of  France  altered  in  the 
same  proportion.  It  was  composed  in  1876  of  1,539,000,000 
francs  in  gold  and  640,000,000  in  silver;  in  1880  it  com- 
prised 564,000,000  in  gold  and  1,222,000,000  in  silver.  It 
had  thus  lost  in  these  five  years  975,000,000  of  gold  and  un- 
willingly acquired  582,000,000  of  silver.  I  It  is  a  fact  worthy 
of  note  in  this  connection  that  from  1876  to  1880  the  French 
imports  of  merchandise  exceeded  exports  by  over  4,500,000,- 
000  francs. 

The  imports  of  gold  into  the  United  States  during  some 
periods  of  the  year  exceeded  the  capacity  of  the  Philadelphia 
mint.  The  Director  of  the  Mint  in  his  annual  report  (1880) 
said: 

"  The  past  fiscal  year  has  exhibited  monetary  phenomena  unusual 
and  unexpected.  The  deficient  harvests  in  Europe  and  our  unusual 
bounteous  supply  of  exportable  food  produced  an  importation  of  gold 


i  De  Normandie,  Governor  of  the  Bank  of  France,  address,  May 
14,  1881. 


268  THE  CONFERENCE  OF  1881 

unchecked  by  advancing  prices  or  the  amount  of  existing  circula- 
tion already  seemingly  abundant.  The  heavy  importation  of  foreign 
coin  and  bullion  which  commenced  in  August,  1879,  continued  until 
the  close  of  the  calendar  year,  and  has  been  again  resumed  within 
the  last  three  months.  The  remarkable  increase  of  metallic  circu- 
lation has  been  largely  absorbed  by  the  business  community." 

Concerning  the  mintage  of  this  fiscal  year,  ending  June  30, 
1880,  he  said: 

"  The  British  mint  was  occupied  with  the  coinage  of  gold  only 
during  a  part  of  the  month  of  December,  and  coined  but  $170,571. 
Less  than  $5,000,000  was  coined  at  the  French,  and  about  $11,000,000 
at  the  German,  mints  in  1879,  which  presents  a  striking  contrast  to 
the  coinage  of  $39,080,000  gold  at  the  United  States  mints,  and  an 
accumulation  of  gold  bullion  by  the  1st  of  January  amounting  to 
$60,734,318  beyond  the  capacity  of  the  mints  for  coinage." 

In  their  reports  to  Congress  both  the  President  and  the 
Secretary  of  the  Treasury  dwelt  upon  the  difficulties  of  mak- 
ing the  silver  dollars  circulate ;  they  regularly  returned  to  the 
Treasury  after  they  had,  at  some  little  expense  for  transporta- 
tion, been  sent  out  to  different  points.  For  these  and  other 
reasons  they  recommended  that  the  further  compulsory  coin- 
age of  such  dollars  be  suspended,  or  that  the  ratio  be  changed 
so  that  their  intrinsic  value  would  be  nearer  equal  to  that  of 
gold.  The  average  value  of  the  silver  dollar  in  1880  was  88£ 
cents.  The  Secretary  said : 

"  It  may  be  better  for  Congress  at  the  present  time  to  confine  its 
action  to  the  suspension  of  the  coinage  of  the  silver  dollar,  and  to 
await  negotiations  with  foreign  powers  for  the  adoption  of  an  inter- 
national ratio  ;  but  compelled  by  official  duty  to  report  upon  this 
subject,  the  Secretary  feels  bound  to  express  his  conviction  that  it  is 
for  the  interest  of  the  United  States  now,  as  the  chief  producer  of 
silver,  to  recognize  the  great  change  that  has  occurred  in  the  relative 
market  value  of  silver  and  gold  in  the  chief  marts  of  the  world,  to 
adopt  a  ratio  for  coinage  based  upon  market  value,  and  to  conform 
all  existing  coinage  to  that  ratio,  while  maintaining  the  gold  eagle 
of  our  coinage  at  its  present  weight  and  fineness.  He  confidently 
believes  that  the  effect  of  this  measure  will  be  to  make  our  gold  and 
silver  coins  the  best  international  standards  of  value  known." 

It  is  evident  that  the  Secretary  was  not  hopeful  of  any 
practicable  results  of  the  coming  conference,  or  that  he  mis- 
understood the  feeling  of  the  Latin  Union  as  to  the  proper 
ratio.  "While  the  coinage  of  silver  at  the  ratio  of  18  to  1,  the 
market  ratio  at  that  time,  would  have  given  us  temporarily 


JOINT  ARRANGEMENTS  FOR  ANOTHER  CONFERENCE  269 

a  silver  dollar  worth  as  much  as  gold,  it  would  have  placed 
another  obstacle  in  the  path  of  bimetallism,  and  we  can  see, 
now  at  least,  that  such  a  coin  would  have  speedily  depreciated. 
Such  dollars  would  not  have  circulated,  and  had  their  coinage 
been  authorized  at  the  discretion  of  the  Secretary  very  few 
of  them  probably  would  have  been  coined. 

Congress  refrained  from  any  action.  In  view  of  the  pro- 
posed conference  it  was  better  to  remain  inactive,  and  so  afford 
the  European  nations  no  new  reasons  for  maintaining  their  at- 
titude of  expectancy.  There  was  only  one  course  that  would 
really  have  helped  the  cause  of  bimetallism  under  the  circum- 
stances —  the  prompt  and  unconditional  repeal  of  the  Bland- 
Allison  Act.  It  would  have  produced  more  effect  upon  Eng- 
land than  anything  else.  Still  it  was  fortunate  that  Congress 
did  nothing  worse  than  keep  quiet  upon  the  subject.  Another 
free  silver  bill  would  have  made  a  conference  hopeless,  serious 
as  was  the  condition  of  affairs  in  Europe. 

Arrangements  were  completed  betwreen  our  government 
and  that  of  France  for  the  issue  of  a  joint  invitation  to  the 
other  governments,  and  it  was  sent  out  in  February,  1881.  By 
its  terms  "  the  conference  was  to  examine  and  adopt,  for  the 
purpose  of  submitting  the  same  to  the  governments  repre- 
sented, a  plan  and  a  system  for  the  establishment  by  means  of 
an  international  agreement  of  the  use  of  gold  and  silver  as  bi- 
metallic money,  according  to  a  settled  relative  value  between 
these  two  metals."  Germany  accepted  with  alacrity,  in  strik- 
ing contrast  to  its  declination  of  three  years  before.  The  Eng- 
lish government  made  use  of  its  usual  formula  in  its  reply  — 
it  could  not  discuss  proposals  in  support  of  the  principle  of  the 
double  standard,  but,  upon  reflection,  it  said,  and  out  of  cour- 
tesy it  would  send  delegates  with  the  understanding  that  they 
would  in  no  way  be  bound  by  the  conclusions  of  the  confer- 
ence. It  did  not  this  time  ask  for  a  side-door  arrangement  in 
the  shape  of  the  consideration  of  plans  for  unity  of  coinage; 


270  THE  CONFERENCE  OF  1881 

there  was  danger,  under  the  changed  circumstances,  that  those 
seeking  the  conference  would  decline  to  inject  that  pretence 
into  the  invitations  again,  and  it  was  plain  that  England  was 
too  seriously  interested  to  allow  herself  to  be  unrepresented. 
She  was  earnestly  desirous  of  having  the  other  states  do  some- 
thing for  silver,  and  of  maintaining  the  exclusive  gold  stand- 
ard for  herself  exclusively. 

The  delegates  accredited  to  the  conference,  which  by  agree- 
ment was  to  assemble  at  Paris  April  19,  were  as  follows: 

Aust  rla-Hungary : 

Count  Von  Kuefstein,  Councillor  of  the  Embassy  at  Paris 
and  member  of  the  Chamber  of  Peers. 

Chevalier  Anthony  Von  Niebauer,  Councillor  to  the  Ministry 
of   Finance. 

Alexander  Von  Hegedus,  Deputy  in  the  Hungarian  Diet. 
Belgium : 

Eudore  Pirmez,  member  of  the  House  of  Representatives. 

Garnier-Heldewier,  Councillor  to  the  Legation  at  Paris. 
Denmark: 

Moritz  Levy,  Councillor  of  State. 
Germany: 

Baron  Von  Thielmann,  Councillor  to  the  Embassy  at  Paris. 

Schraut,    Government   Privy-Councillor. 
Greece: 

Brailas-Armeni,  Minister  to  France. 
The  Netherlands: 

A.  Vrolik,  ex-Minister  of  Finance. 

Pierson,  Professor  of  Political  Economy  at  the  University  of 

Amsterdam,  Director  of  the  Bank  of  the  Netherlands. 
Portugal: 

Count  Do  San-Miguel,  Secretary  of  the  Legation  at  Paris. 
Sweden: 

Dr.  Hans  Forssell,  President  of  the  Chamber  of  Finance. 
Norway: 

Dr.  Broch,  Professor  at  the  University  of  Christiania. 
Spain: 

Moret  y  Prendergast,  Deputy  in  the  Cortes. 
Switzerland: 

Dr.  Kern,  Minister  to  France. 

Charles  E.  Lardy,  Councillor  to  the  Legation  at  Paris. 

Burckhardt-Bischoff,  banker. 
Italy: 

Seismit-Doda,  ex-Minister  of  Finance,  member  of  the  Italian 
Parliament. 

Luzzatti.  member  of  the  Italian  Parliament. 

Simonelli.  member  of  the  Italian  Parliament. 

Count  Rusconi,  Secretary-General  of  the  Council  of  State. 
Russia: 

T.  de  Thoener,  Privy-Councillor  and  Director  of  the  Treasury 
Department. 


PERSONNEL  OP  TUB  CONFERENCE  271 

\ 

England: 

Sir  Charles  Freinantle,  Deputy  Master  of  the  Mint  at  London. 
British  India: 

Sir  Louis  Mallet,  Under-Secretary  of  State. 

Lord  Reay. 
Canada: 

Sir  Alexander  Gait,  High  Commissioner  of  Canada  at  London. 
France: 

Barth61emy  Saiut-Hilaire,  Minister  for  Foreign  Affairs. 

J.  Magnin,  Minister  of  Finance. 

J.  B.  Dumas,  President  of  the  Board  of  Control  of  Monetary 
Circulation. 

De  Normandle,  Governor  of  the  Bank  of  France. 

Enrico  Cernuschi. 
United  States: 

William  M.  Evarts,  ex-Secretary  of  State. 

Allen  G.  Thurmau,  ex-Senator  from  Ohio. 

Timothy  O.  Howe,  ex-Senator  from  Wisconsin. 

S.  Daua  Horton. 

The  personnel  of  the  conference,  it  will  be  seen,  was 
largely  new.  France  appeared  with  a  delegation  of  pro- 
nounced bimetallists,  including  Cernuschi,  whose  polemics  had 
greatly  influenced  French  opinion.  England  allowed  herself 
to  be  represented  mainly  through  the  governments  of  her  col- 
onies, the  government  of  India  appearing  for  the  first  time  in 
an  international  conference.  The  only  delegate  who  had  rep- 
resented his  government  in  both  the  conferences  of  1867  and 
1878  was  Broch,  of  Norway;  Vrolik,  of  the  Netherlands,  had 
been  appointed  a  delegate  to  both,  but  was  unable  to  attend  in 
1878.  The  only  other  member  of  the  conference  of  1867  was 
Dr.  Kern,  of  Switzerland.  Feer-llerzog,  the  eminent  advocate 
of  the  gold  standard,  who  had  represented  his  government  in 
every  conference  up  to  this  time,  was  dead.  Baron  Von  Kuef- 
stein  of  Austria,  Pirinez  of  Belgium,  Lardy  of  Switzerland, 
Count  Rusconi  of  Italy,  Thoerner  of  Russia,  and  Dana  Hor- 
ton of  the  United  States  had  been  members  of  the  conference 
of  three  years  before. 

The  conference  was  called  to  order  on  the  afternoon  of 
April  21,  1881,  at  the  Ministry  of  Foreign  Affairs  by  Minis- 
ter Hildaire,  who  welcomed  the  delegates  cordially,  and  said 
that,  while  the  conference  of  1878  had  seemed  premature,  and 


272  THE  CONFERENCE  OF  1881 

so  had  accomplished  nothing,  the  "  significant  and  even  alarm- 
ing symptoms  "  that  had  manifested  themselves  in  the  three 
years  that  had  elapsed  indicated  that  the  time  was  ripe  for 
action.  Magnin,  the  French  Minister  of  Finance,  was  chosen 
president,  and  Vrolik,  of  the  Netherlands,  vice-president.  The 
former,  in  taking  the  chair,  reviewed  the  history  of  preceding 
conferences  and  expressed  the  hope  that  it  could  at  last  be 
proved,  by  the  data  of  theory  as  well  as  by  those  of  experience, 
that  international  bimetallism  was  the  only  system  capable  of 
restoring  monetary  regularity  throughout  the  world.  In  con- 
sidering the  advisability  of  the  preparation  of  a  questionnaire, 
it  appeared  that  some  of  the  delegates,  especially  those  of 
Germany,  were  anxious  to  first  submit  to  the  conference  cer- 
tain declarations  as  to  the  position  of  their  governments,  but 
the  majority  favored  the  preparation  of  a  questionnaire  first, 
and  the  selection  of  a  committee  for  the  purpose  was  left  to 
the  delegations  of  France  and  the  United  States.  They  de- 
cided that  the  committee  should  be  composed  of  one  delegate 
from  each  country  represented,  and  should  be  chosen  by  the 
delegations  themselves.  The  suggestion  was  adopted,  and  the 
conference  adjourned  to  await  the  action  of  the  committee  so 
chosen. 

The  committee  met  two  days  later  and  was  composed  of 
Baron  von  Thielmann  for  Germany,  Niebauer  for  Austria, 
Hegedus  for  Hungary,  Pirmez  for  Belgium^  Prendergast  for 
Spain,  Horton  for  the  United  States,  Cernuschi  for  France, 
Brailas  for  Greece,  Vrolik  for  the  Netherlands,  Count  Do  San- 
Miguel  for  Portugal,  Dr.  Forssell  for  Sweden,  Dr.  Broch  for 
Norway,  Luzzatti  for  Italy,  Thoerner  for  Russia,  and  Dr. 
Kern  for  Switzerland.  England  and  her  colonies  were  not 
represented,  their  delegations  not  having  arrived.  The  diffi- 
culty of  securing  a  definite  decision  in  so  large  a  committee  in 
a  short  space  of  time  was  soon  manifest,  and  it  was  determined 
to  delegate  to  Cernuschi  and  Horton,  as  the  representatives  of 


THE  DUTCH  PROPOSITIONS  ADOPTED  273 

the  states  from  which  the  invitations  had  emanated,  the  work 
of  preparing  a  draft  of  questions  for  submission  at  a  later  meet- 
ing. The  Dutch  delegates  had  prepared  a  plan  of  discussion 
which  was  placed  at  the  disposal  of  Cernuschi  and  Horton,  who 
went  to  work  earnestly,  but  as  theorists.  They  each  prepared 
an  elaborate  questionnaire,  dealing  extensively  with  the  the- 
ory and  history  of  money.  A  discussion  of  them  would  have 
consumed  many  days  in  such  a  conference.  It  was  not  till  the 
third  of  May  that  they  were  ready  for  presentation  to  the  com- 
mittee. At  the  meeting  that  day,  England  was  represented  by 
Sir  Charles  Fremantle.  Neither  of  the  proposals  submitted 
by  Cernuschi  and  Horton  were  acceptable,  except  to  those 
who  desired  to  give  great  prominence  to  the  scientific  side  of 
the  discussion,  and  they  were  very  few.  Practicable  and  diplo- 
matic questions  were  preferred,  and  the  result  was  that  the 
plans,  on  which  Cernuschi  and  Horton  had  worked  nine  days, 
were  thrown  aside  by  the  committee,  and  the  plan  originally 
submitted  by  the  Dutch  delegates  was  adopted,  with  abundant 
assurances  to  Cernuschi  and  Horton  that  the  scientific  value  of 
the  questions  they  proposed  was  fully  appreciated.  The  de- 
sire of  the  German  delegates  and  of  others  to  submit  declara- 
tions before  debate  was  begun  manifested  itself  again,  and, 
it  being  generally  understood  that  Baron  von  Thielmann  had 
important  considerations  to  offer,  the  committee  decided  to 
report  in  favor  of  hearing  the  declarations  immediately  after 
the  reading  of  the  questionnaire,  which  was  as  follows: 

"  I.  Have  the  diminution  and  the  great  oscillations  which  have 
taken  place  in  the  value  of  silver,  chiefly  within  the  last  few  years, 
been  hurtful  or  not  to  commerce,  and,  consequently,  to  general 
prosperity  ? 

"  Is  it  desirable  that  the  relation  of  value  between  the  two  metals 
should  possess  a  high  degree  of  stability? 

"  II.  Should  the  phenomena  referred  to  in  the  first  part  of  the 
preceding  question  be  attributed  to  increase  in  the  production  of 
silver  or  to  acts  of  legislation? 

"  III.  Is  it,  or  is  it  not,  probable  that,  if  a  large  group  of  states 
should  agree  to  the  free  and  unlimited  mintage  of  lawful  coins  of 
the  two  metals,  with  full  legal  tender  faculty,  at  a  uniform  ratio  be- 
18 


274  THE  CONFERENCE  OF  1881 

tween  the  gold  and  silver  contained  in  the  monetary  unit  of  each 
metal,  a  stability  in  the  relative  value  of  these  metals  would  be  ob- 
tained which,  if  not  absolute,  would,  at  least,  be  very  substantial? 

"  IV.  If  so,  what  measures  should  be  taken  to  reduce  to  a 
minimum  the  oscillations  in  the  relative  value  of  the  two  metals  ? 

"  For  instance: 

"  1.  Would  it  be  desirable  to  impose  upon  privileged  banks  of 
issue  the  obligation  to  receive  at  a  fixed  price  any  gold  and  silver 
bullion  which  the  public  might  offer? 

"  2.  How  could  the  same  advantage  be  secured  to  the  public  in 
countries  where  privileged  banks  of  issue  do  not  exist? 

"  3.  Should  coinage  be  gratuitous,  or,  at  least,  uniform,  for  the 
two  metals  in  all  countries? 

"  4.  Should  there  be  an  understanding  that  international  trade 
in  the  precious  metals  should  be  left  free  of  all  restraint? 

"  V.  In  adopting  bimetallism,  what  should  be  the  ratio  between 
the  weight  of  pure  gold  and  of  pure  silver  contained  in  the  monetary 
units?" 

This  was  laid  before  the  conference,  which  reassembled  on 
May  5,  with  the  recommendation  that  the  delegates  having 
declarations  to  make  should  have  the  opportunity  to  do  so 
before  the  opening  of  the  debates;  that  general  discussion 
should  precede  the  deliberations  upon  the  different  paragraphs 
of  the  questionnaire,  and  that  each  delegate  should  retain  the 
right  to  propose  new  questions  at  any  time.  These  recom- 
mendations were  adopted,  and  it  was  fully  two  months  before 
any  attention  was  paid  to  the  specific  features  of  the  ques- 
tionnaire, except  incidentally  in  a  lengthy  general  discussion. 

The  proceedings  were  begun  by  Baron  von  Thielmann,  who 
read  the  declaration  which  he  was  desirous  of  bringing  before 
the  conference.  In  view  of  the  peculiar  position  in  which 
Germany  had  been  placed  by  her  monetary  reform,  and  as  this 
declaration  was  in  its  nature,  if  not  in  its  effect,  one  of  the  • 
most  important  features  of  the  conference,  it  deserves  to  be 
given  in  full.  It  was  as  follows: 

"  The  imperial  government  of  Germany,  in  taking  part  in  this 
conference  called  for  the  object  of  establishing  an  international 
monetary  system  based  upon  bimetallism,  does  not  Intend  by  so  do- 
ing the  prejudice  its  further  determinations  in  the  premises;  the  dec- 
larations of  its  delegates  should  not,  therefore,  be  regarded  as  def- 
initely binding  upon  the  imperial  government,  but,  rather,  as  a  basis 
for  later  negotiations. 

"  At  the  time,  between  1865  and  1870,  when  monometallism  with 


THE  GERMAN  DECLARATION  275 

the  single  gold  standard  gained  ground  throughout  a  larger  por- 
tion of  the  civilized  countries,  and  when,  towards  the  close  of  that 
period,  a  considerable  quantity  of  gold  found  Its  way  into  the  treas- 
ury of  the  German  Empire,  the  government  took  advantage  of  the 
occasion  to  firmly  establish  Its  monetary  system,  and  to  regulate  in 
a  uniform  manner,  upon  the  basis  of  the  gold  standard,  the  systems 
which,  up  to  that  time,  had  prevailed  in  the  different  states  of  the 
empire.  If,  at  that  period,  Germany  had  retained  the  single  stand- 
ard of  silver,  or  if  she  had  adopted  bimetallism,  other  countries 
could  the  more  easily  have  passed  to  the  single  gold  standard,  for 
the  reason  that  the  establishment  of  bimetallism  in  Germany  would 
have  facilitated  the  sale  of  their  silver. 

"  The  monetary  reform  in  Germany,  determined  upon  and  de- 
creed after  mature  consideration,  is  at  this  moment  in  a  very  ad- 
vanced state;  1747  millions  of  marks  have  been  struck  in  gold  coins, 
while  1080  millions  of  marks  in  silver  coins,  of  earlier  mintage, 
have  been  demonetized;  the  cost  of  these  operations  amounting  to 
44  millions  of  marks. 

"  According  to  the  highest  estimate,  there  still  remain  in  Germany 
about  500  millions  of  marks  in  old  thalers,  including  Austrian 
thalers.  This  monetary  reform  has  sensibly  bettered  the  condi- 
tion of  monetary  circulation  in  Germany;  not  only  has  the  general 
circulation  augmented,  as  calculated  per  capita  of  the  inhabitants, 
but  it  has  also  gained  in  this  respect,  that  the  circulation  of  gold 
has  increased,  while  that  of  silver  money  and  of  subsidiary  coins, 
as  well  as  of  notes  not  covered  by  a  metallic  reserve,  has  diminished. 
While,  therefore,  considering  the  monetary  system  of  Germany,  as 
established  upon  solid  foundations,  we  in  no  wise  fail  to  recognize 
the  import  of  the  fall  in  the  metal  silver,  which  has  since  occurred. 

"  It  is  generally  agreed  to  attribute  this  fall  less  to  the  sales  of 
silver  made  by  Germany  than  to  the  measure  adopted  by  our 
government  of  taking  from  silver  its  quality  of  legal  tender,  an 
action  which  led  the  states  of  the  Latin  Union  to  put  a  stop  to  their 
coinage  of  silver. 

"  It  cannot  be  denied  that  this  latter  measure,  by  doing  away  with 
the  compensating  effect  which,  until  then,  had  maintained  within 
narrow  limits  the  oscillations  in  the  price  of  silver,  removed  all 
obstacles  to  a  progressive  and  limitless  fall;  it  is,  on  the  other  hand, 
but  just  to  admit  that  the  fear  of  finding  themselves  compelled  to 
receive  a  half-milliard  of  marks  of  German  silver,  which  could  not 
fail  to  depreciate  in  a  very  considerable  degree  their  own  circulation, 
had  no  Uttle  influence  in  the  decision  taken  by  the  Latin  Union. 

"  The  fall  of  silver  would,  nevertheless,  not  have  reached  the 
point  it  did  if  at  the  same  time  the  production  of  that  metal  had  not 
considerably  augmented  in  America  while  the  demand  in  Asia  was 
diminishing.  In  view  of  these  combined  circumstances,  the  im- 
perial government,  in  the  month  of  May,  1879,  resolved  to  suspend  its 
sales  of  silver,  and  they  have  not  since  been  resumed.  This  action, 
by  giving  firmness  to  the  metal  market,  tended  to  facilitate  the 
initiative  of  those  powers  which  were  interested  in  the  rehabilita- 
tion of  silver.  It  also  had  the  effect  of  diminishing  the  demand  for 
gold,  a  fact  the  more  important  in  that  the  decreasing  production 
of  the  latter  metal,  in  the  face  of  a  constantly  growing  demand,  hnd 
within  the  last  few  years  caused  a  certain  degree  of  tension  in  the 
market. 


276  THE  CONFERENCE  OF  1881 

"  We  recognize  without  reserve  that  a  rehabilitation  of  silver  is 
to  be  desired,  and  that  it  might  be  attained  by  the  re-establishineut 
of  the  free  coinage  of  silver  in  a  certain  number  of  the  most  popu- 
lous states  represented  at  this  conference,  if  these  states,  to  this 
end,  should  adopt  as  a  basis  a  fixed  relation  between  the  value  of 
gold  and  that  of  silver.  Nevertheless,  Germany,  whose  monetary 
reform  is  already  so  far  advanced  and  whose  general  monetary 
situation  does  not  seem  to  call  for  a  change  ot  system  so  vast  in 
scope,  does  not  find  herself  in  a  position,  so  far  as  she  is  concerned, 
to  concede  the  free  coinage  of  silver.  Her  delegates  are,  therefore, 
not  able  to  subscribe  to  a  proposition  looking  to  such  action. 

"  The  imperial  government  is,  on  the  other  hand,  entirely  dis- 
posed to  do  its  best  to  second  the  efforts  of  other  powers  which 
might  wish  to  unite  with  a  view  to  the  rehabilitation  of  silver  by 
means  of  the  free  coinage  of  this  metal.  In  order  to  reach  this  end, 
and  to  guarantee  these  powers  against  the  afflux  of  the  German 
silver,  which  they  seem  to  fear,  the  imperial  government  would 
voluntarily  impose  upon  itself  the  following  restrictions: 

"  During  a  period  of  some  years  it  would  abstain  from  all  sales 
of  silver,  and,  during  another  period  of  a  certain  duration,  it  would 
pledge  itself  to  sell  annually  only  a  limited  quantity,  so  small  in 
amount  that  the  general  market  would  not  be  glutted  thereby.  The 
duration  of  these  periods,  and  the  quantity  of  silver  to  be  sold  yearly 
during  the  second  period,  would  form  the  subject  of  ulterior  nego- 
tiations. Such  an  arrangement  would  efficiently  protect  the  mints 
of  the  bimetallic  states  against  the  unlimited  outflow  of  German 
thalers  drawn  from  the  national  funds.  Private  individuals,  or  the 
imperial  bank  (which  is  a  private  bank  under  special  control  of  the 
government),  would  not  be  able,  on  the  other  hand,  to  cause  thalers 
to  flow  to  the  mints  of  the  bimetallic  union,  except  in  the  case  of 
the  balance  of  trade  being  against  Germany,  or  unless  the  relation  of 
1  to  15.50,  established  by  the  bimetallic  union,  should  undergo  a  con- 
siderable modification  in  favor  of  silver.  This  last  contingency  ap- 
pears, however,  but  slightly  probable.  In  all  other  cases  the  ex- 
portation of  thalers  would  of  necessity  entail  a  loss  to  those  who 
might  undertake  it;  and  hence  the  countries  of  the  bimetallic  union 
have  no  occasion  to  apprehend  that  the  silver  of  Germany  will  inun- 
date their  mints.  Furthermore,  these  operations  could  be  rendered 
still  more  difficult  by  excluding  specie  in  thalers  from  the  coinage 
in  the  bimetallic  union;  a  measure  of  this  kind  would  add  to  the 
other  expenses  to  be  borne  by  the  exporters  of  silver,  that  of  the 
cost  of  melting  down  and  refining  the  thalers. 

"  If  an  international  arrangement  based  upon  these  indications 
could  be  arrived  at,  Germany  would  still  remain  free  to  sell  silver 
within  these  self-imposed  limits,  or  to  sell  none  at  all.  But  Ger- 
many, in  order  still  further  to  contract  even  these  limits,  might  make 
other  concessions. 

"She  could  provide  in  her  own  circulation  a  wider  area  for  the 
metal  silver,  thus  enlarging  the  use  of  it.  To  attain  this  end  the 
imperial  government  would  engage,  eventually,  to  retire  the  gold 
pieces  of  5  marks  (27,750.000  marks),  as  well  as  the  imperial  treas- 
ury notes  of  the  same  value  (40.000,000  marks). 

"  It  might  further  melt  down  and  recoin  the  silver  pieces  of  5 
and  2  marks  (71  and  101  millions  of  marks),  taking  as  a  basis  a  re- 
lation between  the  two  metals  approaching  that  of  1  to  15.50,  whereas, 


GERMANY'S  SO-CALLED  CONCESSIONS  277 

under  existing  legislation  100  marks  are  made  from  the  pound  of 
flue  silver,  which  is  equivalent  nearly  to  the  ratio  of  1  to  14. 

"  You  have  here,  gentlemen,  the  concessions  which  the  imperial 
government  would  offer,  and  of  which  its  delegates  are  now  ready 
to  discuss  the  scope  and  the  details  of  execution." 

The  three  so-called  concessions  that  Germany  was  ready 
to  make,  therefore,  were,  first,  the  suspension  of  the  sales  of 
silver,  something  which  had  already  occurred;  second,  the  sub- 
stitution of  silver  money  for  small  gold  coins  and  notes,  which 
Bismarck  had  already  recommended  to  the  Federal  Council 
as  a  way  to  dispose  of  the  bar  silver  in  the  hands  of  the 
government  and  to  avoid  the  losses  by  sales;  and,  third,  to 
replace  the  larger  silver  pieces,  coined  at  14  to  1,  by  silver 
coins  minted  at  15.50  to  1,  the  significance  of  which  will  ap- 
pear later.  In  other  words,  Germany  offered  as  concessions 
either  what  she  had  been  compelled  by  the  force  of  circum- 
stances and  in  her  own  defence  to  adopt  as  a  policy,  or  what 
appeared  to  the  government  as  possible  aids  in  ultimately  car- 
rying out  the  programme  of  the  gold  standard. 

This  declaration  was  followed  by  others  from  several 
states.  Sir  Charles  Fremantle,  of  England,  restated  the 
familiar  position  of  his  government,  which  did  not  permit 
him  to  vote  for  the  propositions  that  might  be  submitted,  but 
did  not  prevent  him  from  following  the  discussions  with  the 
liveliest  interest.  Lord  Reay  said  that  the  presence  of  Indian 
delegates  must  not  be  regarded  as  an  admission  that  bimetal- 
lism could  be  adopted  in  India,  but  the  government  was 
greatly  interested  in  the  restoration  of  the  value  of  silver.  The 
Canadian  delegate  said  he  could  vote  upon  any  propositions 
submitted,  but  his  government  reserved  full  liberty  of  action. 
The  Danish  delegate  had  instructions  to  abstain  from  all  dis- 
cussions of  the  manner  by  which  the  bimetallic  system  could 
be  regulated,  as  his  government  had  no  intention  of  abandon- 
ing the  gold  standard  so  recently  introduced.  The  Portuguese 
government,  announcing  that  it  could  not  enter  into  a  bimetal- 


278  THE  CONFERENCE  OF  1881 

lie  union  while  its  existing  system  prevailed,  would,  never- 
theless, consider  the  results  of  the  conference  and  take  what 
action  it  saw  fit.  The  delegates  of  Russia,  Greece,  Sweden, 
and  Norway  made  similar  reservations.  Count  von  Kuef  stien 
said  that  his  government  would  follow  the  labors  of  the  con- 
ference with  the  same  sympathy  as  in  1878,  and  make  the 
same  reservations.  His  attitude  would  be  one  of  friendly 
reserve,  cherishing  the  hope  that  the  conference  would  not 
finally  separate  before  adopting  some  remedy  for  the  evils  of 
the  monetary  situation,  which  Austria  considered  serious  from 
more  than  one  point  of  view.  So  long  as  its  currency  was  es- 
sentially one  of  paper,  the  government  was  not  in  a  position 
to  enter  into  any  definite  agreement  regarding  bimetallism. 
The  Swiss  delegates  announced  that  by  their  instructions  they 
were  to  listen  to  the  reasons  for  the  proposed  action  and  report 
to  their  government  for  subsequent  instructions  before  taking 
their  ground. 

Following  these  formal  declarations  the  general  discussion 
upon  the  questionnaire  as  a  whole  was  begun.  As  it  was 
very  extended,  the  minutes  of  the  proceedings  making  a  vol- 
ume in  themselves,  an  effort  will  be  made  to  outline  as  con- 
cisely as  possible,  without  the  loss  of  any  essential  points,  its 
general  character,  special  attention  being  given  to  the  more 
practical  features  which  prevailed  to  a  greater  extent  than 
in  preceding  conferences,  doubtless  because  of  the  German 
declaration  and  other  considerations  developed  from  time  to 
time.  The  theoretical  arguments  for  and  against  the  double 
standard  were  mainly  of  the  familiar  character.  It  will  be 
better,  also,  as  the  nature  of  the  debate  was  to  a  considerable 
extent  shaped  by  points  developed  in  its  course,  to  follow  it  in 
regular  order,  rather  than,  by  departing  from  it,  to  indicate  the 
conclusions  upon  particular  phases. 

It  was  opened  by  Cernuschi,  who  called  attention  to  the 
importance  of  the  German  declaration  and  made  some  rather 


CERNUSCHI  OPENS  THE  DEBATE  279 

sharp  remarks  about  the  persistent  obstinacy  of  England.  The 
success  of  the  conference,  he  said,  depended  upon  the  concord 
of  the  four  great  metallic  powers  of  the  world,  France,  the 
United  States,  Germany,  and  Great  Britain.  The  understand- 
ing between  the  two  former  was  an  accomplished  fact,  so  that 
the  fate  of  bimetallism  depended  upon  the  two  latter.  Their 
refusal  to  co-operate  would  condemn  it  to  remain  impractica- 
ble. The  conversion  of  Germany  to  the  principle  of  bimetal- 
lism he  regarded  as  an  accomplished  fact.  Its  delegate  had  ad- 
mitted the  desirability  of  the  rehabilitation  of  silver,  and  an- 
nounced its  disposition  to  aid  in  the  undertaking.  But  the  con- 
currence of  Great  Britain  was  for  the  time  being  refused.  He 
added: 

"  We  cannot  be  astonished  at  this.  In  acting  thus  the  British 
government  is  in  a  certain  sense  only  carrying  out  its  time-honored 
methods.  England  never  abandons  her  traditions  except  with  ex- 
treme circumspection;  she  needs  ten  years  to  accomplish  an  eco- 
nomic revolution.  It  took  ten  years  for  Sir  Robert  Peel  to  pass 
from  the  camp  of  protection  to  that  of  free  trade;  ten  years  to  cease 
from  being  a  partisan  of  paper  and  an  adversary  of  coin.  The 
cabinet  of  London  may  still  require  some  time  before  it  adheres  to 
the  principle  of  bimetallism;  but  its  conversion  may  almost  be  re- 
garded as  certain." 

While  he  was  not  disposed  to  find  fault  with  the  attitude  of 
Germany,  her  propositions  seemed  to  him  insufficient,  for 
under  them  German  bankers  could  still  send  silver  abroad  in 
payment  but  decline  to  receive  it.  He  recalled  the  fact  that 
ten  years  before  nearly  all  the  nations,  including  France,  \vere 
moving  towards  gold  monometallism  as  a  result  of  the  con- 
clusions of  the  conference  of  1867.  It  was  natural  enough, 
he  said,  that  Germany  took  the  course  apparently  open  to  her. 
She  did  not  wish  by  becoming  a  bimetallic  power  to  run  the 
risk  of  being  used  as  a  stepping-stone  by  the  other  states;  she 
did  not  wish  to  aid  her  neighbors  to  adopt  gold  monometallism 
so  that  they  might  be  able  to  thereafter  use  it  against  her- 
self. Had  it  not  been  for  this  natural  fear,  Cernuschi  believed 
that  she  would  have  preferred  and  adopted  bimetallism  and 


280  THE  CONFERENCE  OP  1881 

saved  the  96,000,000  marks  which  her  reform  had  cost  her, 
and  which,  in  his  view,  the  other  states  had  gained  at  her  ex- 
pense. This  led  him  to  make  a  remarkable  proposition,  though 
upon  his  own  personal  responsibility.  In  purchasing  from  the 
German  treasury,  as  merchandise,  a  metal  degraded  by  its  de- 
monetization, and  thereafter  putting  in  circulation  this  same 
metal  transformed  into  money  at  the  legal  ratio,  all  the  states, 
he  maintained,  had  made  a  profit  at  Germany's  expense.  "  Let 
each  one  find  out  the  sum  of  its  gain,"  he  said,  "  and  reimburse 
Germany  in  the  amount,  and  Germany,  thus  indemnified,  for 
the  96,000,000  marks  she  has  lost,  could  return  without  re- 
strictions to  bimetallism."  lie  believed  that  India  could  well 
afford  to  contribute  largely  to  the  amount,  for  no  country 
would  profit  so  much  by  such  a  change;  a  restoration  of  bi- 
metallism would  mean  for  the  Indian  treasury  an  annual  sav- 
ing of  at  least  25  millions  of  rupees,  which  it  was  then  losing 
in  the  exchange  on  the  17  millions  of  pounds  sterling  paid  to 
England.  As,  therefore,  most  of  the  nations  were  favorable 
to  the  undertaking,  much  really  depended  upon  Germany,  and, 
an  accord  having  been  reached  upon  the  principles,  the  time 
seemed  to  him  to  have  arrived  to  negotiate  with  the  German 
government  the  practical  conditions  of  an  understanding. 
England,  he  said,  might  take  her  usual  slow  course  in  economic 
reform ;  the  Scandinavian  states  and  Portugal  were  in  a  pecul- 
iar position,  but  they  could  retain  it  without  making  much 
difference;  a  sufficiently  strong  union  could  be  formed  for 
the  time  if  those  states  were  left  to  their  own  policy. 

Dr.  Broch,  of  Norway,  followed  with  a  defence  of  the 
gold  standard,  pointing  out  the  growth  of  gold  monometallism 
since  the  time,  thirty-five  years  before,  when  England  alone 
maintained  it.  The  situation  had  been  reversed;  in  1881  no 
mints  were  open  to  silver,  and  he  believed  that  in  all  the  civil- 
ized countries  of  the  "West  the  future  belonged  to  gold,  and  to 
gold  only.  The  reasons  for  this  great  change,  he  held  to  be 


AN  EFFORT  TO  BRING  PRACTICAL  QUESTIONS  TO  THE  FRONT     281 

the  large  increase  in  the  production  of  gold,  beginning  in 
1850,  and  the  simultaneous  scientific  awakening,  when  the 
people  began  to  have  a  consciousness  of  their  solidarity,  com- 
merce to  attain  a  wider  scope,  and  international  investments 
and  securities  to  become  an  element  of  constantly  growing 
importance,  entering  more  and  more  largely  into  transactions 
and  the  settlement  of  international  accounts.  By  this  means, 
he  said,  Europe  had  just  been  able  to  pay  in  American  securi- 
ties for  the  enormous  supplies  of  cereals  which  three  successive 
bad  harvests  had  compelled  her  to  obtain  from  the  United 
States.  He  believed  that  bimetallism,  even  if  it  could  be 
brought  about,  would  be  injurious,  for  the  dissolution  of  such 
a  union  would  require  a  liquidation  which  would  mean  an  in- 
calculable loss,  and  one  which  even  the  great  states  might  not 
be  able  to  withstand  and  to  which  the  smaller  ones  ought  not 
to  expose  themselves.  He  considered  it  of  great  importance 
not  to  rehabilitate  silver,  which  seemed  impossible,  but  to  put 
a  stop  to  its  fall.  The  true  way  to  do  this,  in  his  opinion,  was 
not  by  arbitrarily  raising  its  value  in  Europe  and  America, 
but  by  encouraging  its  use  in  the  countries  of  the  Orient  which 
still  had  a  preference  for  it. 

Meanwhile  some  of  the  delegates  had  been  privately  con- 
sulting concerning  the  proposals  of  Germany  and  of  Cer- 
nuschi,  and  at  the  conclusion  of  Dr.  Broch's  address  Baron 
von  Thielmann  moved  that  the  session  be  suspended  for  a  half- 
hour.  It  was  agreed  to,  and  at  the  expiration  of  the  recess 
Moret  y  Prendergast,  of  Spain,  proposed  that  the  conference 
should  make  an  alteration  in  the  order  of  its  labors  on  ac- 
count of  the  great  importance  of  the  propositions  that  had 
been  made.  The  communication  of  the  German  delegate,  he 
said,  seemed  to  raise  questions  of  exceptional  gravity  from  a 
practical  point  of  view,  which  most  of  the  governments  repre- 
sented at  the  conference  were  probably  unprepared  to  answer, 
and  the  declarations  of  the  governments  of  Great  Britain, 


282  THE  CONFERENCE  OF  1881 

India,  and  Canada  appeared  to  indicate  a  disposition  to  lend 
aid  under  conditions,  and  to  an  extent  which  had  not  been 
definitely  determined.  He  therefore  proposed : 

1.  To  devote  one  session,  which  might  be  at  an  early  date, 
to  a  general  discussion  of  the  German,  English,  Indian,  and 
Canadian  declarations,  for  the  purpose  of  discovering  their 
scope  and  value. 

2.  To  adjourn,  thereupon,  to  a  date  which  might  be  fixed 
by  the  conference,  or  which  the  president  of  the  assembly 
might  be  left  to  determine,  but  which  should  in  any  case  be 
sufficiently  distant  to  permit  of  the  opening  and  carrying  on  of 
negotiations. 

The  truth  of  the  matter  was  that  the  governments  of 
Great  Britain  and  Germany  were  extremely  anxious  to  bring 
about  an  agreement  which  would  open  the  mints  of  the  Latin 
Union  and  of  the  United  States  to  the  free  coinage  of  silver. 
England  intimated  that  she  might  be  able  to  offer  something  in 
the  way  of  concessions  in  addition  to  those  offered  by  Ger- 
many, and  it  seemed  to  some  of  the  bimetallists  that  the  matter 
was  too  important  to  admit  of  delay.  Cernuschi  clung  to  the 
idea  that  by  his  plan  for  reimbursing  Germany  she  could  be 
brought  into  a  bimetallic  union.  But  upon  consideration  it 
was  thought  that  the  adjournment  of  the  conference  to  an  un- 
certain and  distant  date  might  be  interpreted  in  an  unfavora- 
ble sense,  if  taking  place  almost  at  the  beginning  of  the  labors 
and  just  after  it  had  adopted  a  programme  for  the  delibera- 
tions. This  was  especially  urged  by  the  Dutch  delegates.  It 
was  finally  decided  to  continue  the  general  discussion,  but  to 
take  no  action,  and  a  little  later  the  motion  for  an  adjournment 
admitting  of  negotiations  might  be  made  if  deemed  advisable. 
So  the  lengthy  addresses  in  which  the  English  and  German 
delegates  took  but  little  interest  were  continued. 

Cernuschi  devoted  himself  to  arranging  the  details  of  his 
plan,  and  with  that  end  in  view  proposed  at  the  next  session,  on 


THE  NETHERLANDS  FOB  BIMETALLISM  283 

May  7,  that  the  different  governments  be  requested  to  furnish 
the  conference  with  detailed  information  as  to  their  silver 
coinage  since  January  1,  1874,  the  cost  to  each  state  of  the 
silver  manufactured  into  coin,  the  total  amount  of  profit  re- 
alized by  buying  silver  at  prices  below  60  jf  pence,  or  the 
price  of  parity  with  gold  at  15.50  to  1,  and  to  indicate,  if  possi- 
ble, the  source  of  the  silver  ingots.  The  German  government 
was  also  requested  to  furnish  a  complete  statement  of  its  silver 
coinage.  Dana  Horton,  referring  to  that  statement  in  the  Ger- 
man declaration  which  admitted  the  possibility  of  the  rehabili- 
tation of  silver  through  the  re-establishment  of  free  silver 
coinage  "  in  a  certain  number  of  the  most  populous  states," 
asked  the  German  delegate  in  what  degree  the  attitude  of 
England,  which,  with  its  Indian  possessions,  was  the  most  popu- 
lous, had  been  the  cause  of  the  reserve  shown  by  Germany 
in  her  proposals,  and  whether  it  might  be  hoped  that,  if  Eng- 
land made  some  concessions,  Germany  would  be  disposed  to 
enlarge  her  own.  Baron  von  Thielmann  replied  that  Eng- 
land's attitude  had  certainly  been  of  some  importance  in  de- 
ciding the  plans  of  his  government,  for  German  commerce  was 
largely  settled  by  bills  on  London,  and  it  was  important  to 
have  a  monetary  system  similar  to  that  of  England. 

The  general  discussion  was  then  resumed  by  Pierson,  of 
the  Netherlands,  in  reply  to  the  remarks  of  Dr.  Broch.  The 
bimetallic  system  might  have  its  inconveniences  as  claimed  by 
the  delegate  from  Norway,  but  so,  said  Pierson,  had  the  gold 
monometallic  system.  The  question  was  not  which  system 
was  perfect,  but  which  offered  less  inconveniences.  He  main- 
tained that  the  general  adoption  of  the  gold  standard  would 
be  an  impossibility,  and,  further,  that  it  could  not  have  been 
made  to  work  in  England  had  it  not  been  for  the  simultaneous 
existence  of  bimetallic  states.  He  asked  the  English  delegates 
what,  in  their  opinion,  would  have  been  the  influence  of  the 
gold  discoveries  in  Australia  and  America  on  the  value  of  the 


234  THE  CONFERENCE  OF  1881 

sovereign  had  not  the  double  standard  existed  in  the  Latin 
Union  and  in  other  states,  ready  to  absorb  the  mass  of  gold 
then  poured  upon  the  world.  After  pointing  out  some  of  the 
difficulties  which  he  believed  gold  monometallic  states  had  re- 
cently encountered,  he  expressed  the  opinion  that  bimetallism 
.  was  the  only  remedy.  Giving  that  as  the  conclusion  to  which 
his  government  had  arrived,  he  said :  "  We  are  only  a  small 
country,  and  our  political  influence  is  assuredly  not  what  it 
was  in  the  seventeenth  century.  But  one  thing,  perhaps,  has 
remained  to  us,  namely,  the  reputation  of  not  judging  rashly 
and  of  having,  moreover,  a  little  experience  in  commerce. 
Well,  I  can  assure  you  that  among  our  leading  economists, 
among  our  men  most  conversant  with  business,  there  is  not  one 
—  I  repeat,  not  one  —  who  does  not  acknowledge  the  immense 
advantages  which  would  accrue  from  the  adoption  of  the  bi- 
metallic system  by  all  the  great  states."  He  maintained  by 
an  historical  review  of  monetary  conditions  that  the  double 
standard  was  possible  in  practice  as  well  as  sound  in  theory, 
and  called  upon  those  who  would  not  act  in  concert  in  the  appli- 
cation of  this  remedy  to  tell  the  conference  in  what  way  they 
expected  to  remedy  the  evils  from  which  the  world  was  suffer- 
ing. "For  a  remedy  there  must  be,"  he  said;  "the  present 
situation  is  simply  unbearable." 

Belgium,  which  was  a  strong  advocate  of  the  gold  standard 
in  the  conference  of  1878,  was  even  stronger  in  that  of  1881; 
indeed,  Pirmez  was  the  real  leader  of  the  gold  doctrinaires. 
He  held  that  the  existing  situation  contained  neither  the  evils 
nor  the  dangers  which  had  been  portrayed,  and  that  the  gold- 
standard  countries  were  more  satisfied  with  their  position  than 
any  others.  They  were  resolved  not  to  alter  it;  not  even  Ger^ 
many  proposed  to  do  so,  and,  he  said,  it  was  a  singular  role 
that  bimetallism  was  playing  when  it  endeavored  to  persuade 
those  states  that  they  were  visited  without  their  knowledge 
by  a  serious  economic  disquietude  and  monetary  disease.  On 


POSITION  OP  BELGIUM  AND  OP  ITALY  285 

the  other  hand,  the  states  that  had  in  their  systems  a  remnant 
of  bimetallism  were  the  disturbed  ones.  "  If,"  he  said,  "  the 
Latin  Union,  in  1865,  listening  to  the  counsels  of  Belgium, 
had  purely  and  simply  adopted  the  gold  standard,  as  it  could 
then  have  done,  without  shock,  without  difficulty,  without 
loss,  it  would  now  be  in  as  good  a  position  as  that  of  the  Scan- 
dinavian states,  England,  Portugal,  and  Germany;  if  it  now 
experiences  discomfort,  it  owes  this  to  bimetallism."  But  he 
considered  that  the  states  with  this  legacy  of  abandoned  bi- 
metallism exaggerated  their  own  difficulties.  Their  condi- 
tion, as  he  saw  it,  was  anything  but  alarming,  and  the  meas* 
ures  proposed  by  bimetallists  would  have  the  effect,  not  of 
mitigating,  but  of  aggravating  the  vices  and  dangers  they 
imputed  to  it.  They  asked  countries  embarrassed  with  an  ex- 
cess of  silver  to  coin  still  more,  to  correct  an  excess  by  a  still 
greater  excess.  The  result,  said  Pirrnez,  would  be  disastrous. 
He  did  not  regard  the  recent  gold  famine,  so  called,  as  serious, 
but,  if  it  were,  bimetallism  would  not  help  it,  for  he  believed 
that  the  great  states  would  find  their  gold  being  replaced  by 
silver  under  such  a  system.  In  speaking  of  countries  under 
the  paper-money  system,  he  said  that  it  was  very  natural  for 
such  to  be  supporters  of  bimetallism,  for  they  could  more  easily 
pay  off  their  debts  with  depreciated  silver  than  with  gold. 
Seismit-Doda,  of  Italy,  thereupon  arose  and  denied  emphat- 
ically that  Italy  had  any  such  motive  in  accepting  an  invitation 
to  the  conference. 

His  colleague,  Luzzatti,  continued  the  debate  at  the  next 
session,  on  the  10th,  holding  that  the  economic  optimism  of 
the  Belgian  delegate  did  not  rest  upon  an  accurate  judgment 
of  the  situation.  lie  called  attention  to  the  economic  agitation 
in  England,  the  conversion  of  practical  men  like  Director 
Gibbs,  of  the  Bank  of  England,  and  the  memorials  of  com- 
mercial bodies,  to  show  that  the  conditions  under  the  gold- 
standard  countrv  left  something  to  be  desired.  It  was  suffi- 


286  THE  CONFERENCE  OP  1881 

ciently  evident,  lie  thought,  that  the  German  government  had 
halted  in  perplexity,  Reviewing  the  situation  in  other  states, 
the  conclusion  seemed  to  him  inevitable  that  Europe  required 
gold,  and  would  require  it  more  and  more,  and  yet  the  gold 
it  already  had  was  constantly  going  to  America.  How,  he 
said,  could  the  Belgian  delegate  doubt  this,  when  the  consign- 
ments of  the  metal  told  the  story.  While  in  1879  and  1880 
the  consignments  of  coin  from  Europe  to  the  United  States 
were  made  only  at  the  end  of  the  year  for  the  settlement  of 
accounts,  in  1881,  in  the  first  three  months  alone,  £2,500,000 
of  gold  were  despatched  from  England  to  America,  while  other 
millions  were  exported  during  the  same  period  from  France 
and  Germany;  and  it  would  be  difficult  to  get  it  back.  It 
would,  he  held,  be  folly  for  the  European  nations  to  continue 
to  debase  silver  under  such  circumstances,  and  wisdom  for 
them  to  embrace  the  opportunity  to  establish  bimetallism. 

In  reply  to  what  the  Italian  delegate  said  concerning  senti- 
ment in  England,  Sir  Charles  Fremantle  said  that  Gibbs  would 
be  the  first  to  acknowledge  that,  in  his  pamphlet  advocating  bi- 
metallism, he  had  not  claimed  to  express  the  opinion  of  the 
Bank  of  England,  still  less  public  opinion  in  Great  Britain. 

The  Russian  delegate  endeavored  to  bring  the  conference 
back  to  the  practical  consideration  of  the  German  propositions. 
He  thought  it  was  time  to  quit  the  purely  theoretical  ground 
and  seek  a  practical  solution.  Setting  aside  other  phases  of 
the  question,  he  conceived  it  as  certain  that  one  measure  was 
better  than  two,  and  one  standard  better  than  two,  and  that 
gold  was  the  best  metal  for  a  standard.  But  money  was  also  a 
means  of  exchange,  and,  as  such,  it  should  be  sufficient  to  meet 
the  requirements  of  trade.  It  seemed  clear  to  him  that  there 
was  not  enough  gold.  "  To  deny  the  dearth  of  gold,"  he  said, 
"  is  almost  denying  daylight;  and  this  dearth  will  probably  in- 
crease, for  from  the  monetary  standpoint  the  resumption  of 
specie  payments  by  Italy,  Austria-Hungary,  and  Russia  threat- 


SUGGESTIONS  BY  THE  RUSSIAN  DELEGATE  287 

ens  Europe  with  a  serious  danger."  It  could,  in  his  judgment, 
be  warded  off  by  reverting  in  a  degree  to  the  use  of  silver;  but 
it  was  not  a  question  of  abandoning  the  gold  standard,  or  of 
adopting  bimetallism  at  a  fixed  ratio.  The  true  practical  means 
of  rehabilitating  silver  seemed  to  him  to  lie  in  the  path  opened 
up  by  the  proposals  of  Germany;  the  object  should  be  to  effect 
a  better  distribution  of  the  two  metals,  and  to  enable  states  to 
dispense  with  gold  where  it  was  not  indispensable,  and  place 
it  where  it  seemed  to  be  necessary,  in  the  reserves  of  the  banks. 
He  believed  that  if  a  majority  of  the  nations  would  adopt  the 
policy  of  substituting  silver  coins  for  the  smaller  gold  coins,  it 
would  neutralize  half  of  the  perils  with  which  the  dearth  of 
gold  was  threatening  Europe  in  the  future.  Half  of  what 
Russia,  Austria-Hungary,  and  Italy  would  require  for  the  re- 
sumption of  specie  payments  would  be  found  if  the  gold  pieces 
equivalent  to  10  francs  and  below  were  transformed  into  silver 
pieces.  He  thought  it  might  be  possible  to  go  even  further 
and  extend  to  international  exchanges  the  use  of  silver  with 
the  gold  standard.  An  international  piece  might  be  coined,  or 
the  metal  might  be  considered  from  the  international  stand- 
point, as  a  stock  exchange  security  (valeiir  de  bourse),  whose 
rating  in  relation  to  gold  would  be  periodically  fixed,  either 
according  to  the  average  market  rates,  or  by  virtue  of  an  un- 
derstanding between  governments.  He  called  attention  to 
the  fact  that  formerly  the  gold-monometallist  theory  rested 
on  two  axioms  which  the  German  proposals,  impelled  by  the 
force  of  events,  discarded  —  namely,  that  gold  must  be  coined 
in  the  smallest  possible  subdivisions,  and  that  silver  must  be 
admitted  only  as  subsidiary  tokens  —  and  he  could  not  see  how 
the  conference  could  do  better  than  to  seek  a  practical  applica- 
tion of  the  principle  that  silver  had  a  settled  place  in  the  in- 
ternal circulation  by  the  side  of  gold. 

Count  Rusconi,  on  the  other  hand,  considered  that  the 
conference  would  find  difficulty  in  agreeing  upon  anything 


288  THE  CONFEKENCE  OF  1881 

while  it  could  not  agree  upon  a  definition  of  money.  "Was  it 
merchandise  ?  If  so,  the  bimetallists  were  wrong.  If  not 
merchandise,  if  only  a  creation  of  the  law  which  makes  and 
unmakes  it  at  pleasure,  the  monometallists  were  wrong,  and 
the  law  could  fix  the  ratio  of  value.  He  took  the  bimetallic 
view,  and  ably  supported  it,  suggesting  to  the  conference  in 
conclusion  that  it  would  be  more  profitable  to  begin  with  a 
theoretical  discussion,  and  to  obtain  an  accurate  idea  of  the 
true  nature  of  money  before  undertaking  actual  programmes. 

Burckhardt-Bischoff,  of  Switzerland,  had  for  many  years 
been  a  banker  and  a  believer  in  the  monetary  theories  of  the 
late  Charles  Feer-Herzog.  He  followed  Count  Rusconi  with 
a  strong  argument  against  the  allegation  that  the  law  made 
money,  and  in  support  of  the  gold  standard.  He  very  ingen- 
iously combated  the  theory  that  the  German  monetary  reform 
had  caused  a  loss  to  that  state,  and  that  other  nations  had  prof- 
ited in  buying  her  silver.  In  the  first  place,  he  said,  accord- 
ing to  the  official  documents  communicated  by  the  govern- 
ment of  Germany,  the  difference  resulting  from  the  sale  of 
seven  millions  of  pounds  of  fine  silver  compared  with  the  pur- 
chasing price  amounted  to  only  71,000,000  marks  instead  of 
96,000,000,  as  Cernuschi  had  maintained,  the  difference  aris- 
ing from  the  wear  of  the  old  coin  withdrawn  from  circulation, 
a  loss  inherent  in  every  coin  currency,  and  one  for  which  the 
introduction  of  the  gold  standard  could  not  be  held  responsible. 

If  Germany  were  to  be  reimbursed,  therefore,  according  to 
Cernuschi's  plan,  it  would  require  only  71,000,000  marks;  but, 
he  went  further  and  denied  that  any  loss  had  resulted  to  Ger- 
many from  her  reform.  His  reason  for  this  was  that  the  new 
mark,  which  constituted  the  gold  unit,  had  a  very  different 
and  very  superior  value  to  one-third  of  the  old  thaler  based  on 
silver,  the  alleged  loss  resulting  from  the  exchange  of  the  old 
silver  coins  for  gold  on  the  footing  of  15.50  to  1,  while  the 
ratio  had,  in  fact,  become  through  silver  depreciation  18  to  1. 


HORTON  DEFENDS  BIMETALLISM  289 

He  explained  it  in  this  way:  "  To  buy  1000  kilogrammes  of 
gold,  Germany  has  paid  15,500  kilogrammes  of  silver,  plus 
1700  kilogrammes,  so-called  loss  on  silver  ;  total  17,200  kilo- 
grammes of  silver.  These  1000  kilogrammes  of  gold  are  now 
worth  18,000  kilogrammes  of  silver.  There  is  no  loss,  there- 
fore, but  a  profit;  and  if  Germany  now  wished  to  repurchase 
all  the  silver  she  has  sold  for  eight  years  she  might  do  it  at  a 
considerable  profit." 

He  maintained,  further,  that  the  gain  in  value  was  not  con- 
fined to  the  silver  sold  and  replaced  by  gold,  but  that  the  whole 
circulation  had  gained  in  value.  Germany's  exchange  at  Paris 
had  become  124  francs  per  100  marks,  but  if  Germany  still 
had  her  old  silver  standard  the  exchange  would  be  110  francs 
per  100  marks.  On  a  monetary  stock  of  2,500,000,000  this 
wTould  make  a  difference  of  at  least  350,000,000  marks.  In  his 
opinion,  therefore,  it  was  folly  to  talk  about  reimbursing  Ger- 
many. The  difficulties  created  for  the  Latin  Union  by  the 
stock  of  5-franc  pieces  seemed  to  him  a  much  more  serious  mat- 
ter, and  he  suggested,  as  a  remedy,  that  a  portion  of  the  silver 
rejected  by  circulation  should  be  converted  into  ingots,  of  a 
fixed  weight  and  fineness,  to  be  deposited  in  the  vaults  of  the 
great  banks  of  issue,  and  against  which  certificates  could  be 
issued.  They  might,  he  thought,  be  used  as  bills  of  exchange, 
and  commerce  could  withdraw  the  silver  whenever  it  was  de- 
manded, either  for  the  arts  or  to  send  to  the  East. 

The  American  delegates  first  participated  in  the  debate  at 
the  fifth  session,  on  May  12,  when  Dana  Horton  read  a  long  ad- 
dress in  defence  of  bimetallism.  He  drew  a  picture  of  the  gold 
famine  before  1850,  when  the  world's  stock  of  gold  was  but  40 
per  cent,  of  the  whole  stock  of  the  precious  metals  used  as 
money,  and,  as  it  was  admitted  that  gold  was  again  becoming 
scarce  and  was  likely  to  be  more  scarce,  the  situation  might  be 
repeated.  If  gold  commanded  a  premium  when  silver  was  in 
use  as  money,  and  helped  to  augment  the  stock,  a  worse  calam- 
19  " 


290  THE  CONFERENCE  OF  1881 

ity  would  seem  to  him  the  logical  results  of  a  gold  famine  when 
silver  was  an  ostracized  metal.  Cernuschi  followed  with  an 
argument  to  show  that  bimetallism  was  not  only  legitimate 
and  possible,  but  necessary,  because  the  only  system  that  could 
protect  humanity  from  the  disturbances  resulting  from  the 
variations  in  the  yield  of  the  mines.  Nothing  was  to  be  feared, 
in  his  opinion,  from  a  liquidation  in  case  of  a  possible  dissolu- 
tion of  bimetallic  union,  for  no  state  would  then  have  an  in- 
terest in  demonetizing  a  metal.  It  would  be  ruinous,  as  the 
example  of  Germany  had  proved,  although  during  the  early 
years  of  her  sale  she  had  at  her  side  the  outlet  of  the  Latin 
Union,  while  the  United  States  were  substituting  silver  for 
small  notes  ;  the  operation  took  place  in  coincidence  with  a 
mintage  of  500,000,000  francs  of  silver  in  the  Latin  Union 
and  of  $70,000,000  in  fractional  money  in  the  United  States. 
It  would,  he  said,  be  ruinous  for  the  Latin  Union  to  undertake 
to  demonetize  silver  when  no  outlet  existed  and  monometallism 
was  so  conscious  of  the  difficulties  in  the  fall  of  silver  that  it 
had  come  to  confine  its  pretensions  to  the  maintenance  of  the 
statu  quo.  "  It  is  not  entitled  to  do  this,"  he  said;  "  if  its  doc- 
trine is  sound,  it  should  persist  in  furthering  the  application  of 
that  doctrine ;  but  if  it  pauses,  if  it  is  the  first  to  ask  that  silver 
which  has  already  been  coined  shall  continue  to  be  legal  cur- 
rency with  full  paying  power,  it  is  only  a  disguised  and  limp- 
ing bimetallism." 

Baron  von  Kuefstein,  speaking  in  behalf  of  the  nations  on 
a  paper  basis,  said  that  they  could  not  be  expected  to  take  a 
metal  that  the  rest  of  the  world  rejected,  and  it  would  be  ex- 
ceedingly difficult  for  them  to  secure  gold  in  the  existing  situa- 
tion. He  looked  with  favor  upon  the  suggestion  of  the  delegate 
of  Russia  as  to  the  calling  in  of  the  5  and  10  franc  gold  pieces. 

At  this  point  the  Spanish  delegate  again  tried  to  bring  the 
conference  to  the  speedy  consideration  of  the  German  and 
other  proposals.  He  asked  it  to  at  once  provide  for  an  adjourn- 


BIMETALLISM  URGED  BY  THE  BANK  OF  FRANCE  291 

inent,  after  having  heard  the  speakers  whose  names  were  still 
on  the  list  as  desiring  to  take  part  in  the  general  discussion. 
The  German  delegate  supported  the  motion,  but  the  matter 
was  left  still  undecided.  The  general  discussion  was  con- 
tinued at  the  sixth  session,  May  14,  by  I)e  Normandie,  Gov- 
ernor of  the  Bank  of  France,  who  delivered  a  learned  ad- 
dress on  the  theoretical  and  historical  side  of  the  question.  On 
the  historical  side  he  maintained  that  institutions  of  credit 
had  had  a  much  less  severe  ordeal  in  bimetallic  than  in  mono- 
metallic countries.  He  enumerated  the  number  of  times  in 
fifty  years  that  the  Bank  of  England  had  been  compelled  to 
appeal  to  the  Bank  of  France  for  help,  while  the  latter  had  al- 
ways been  able  to  maintain  a  steadier  and  a  lower  rate  of  dis- 
count. In  the  forty-five  years  from  1837  to  1881  the  Bank  of 
France  had  altered  its  discount  rate  only  100  times,  while  that 
of  the  Bank  of  England  had  changed  292  times.  He  furnished 
a  very  clear  statement  of  the  changes  that  had  taken  place  in 
the  reserves  of  the  Bank  of  France,  the  loss  of  gold  and  the  in- 
crease of  silver,  and,  he  said,  many  were  consequently  asking  in 
anxiety  what  might  be  the  result  of  the  conference.  "  With 
the  development  of  business,  with  that  feverish  movement 
which,  with  a  full  head  of  steam,  carries  along  the  commercial 
and  financial  world,  who,"  he  asked,  "  would  maintain  that  a 
single  precious  metal  is  sufficient  to  meet  the  ever-increasing 
requirements  of  the  public  ? "  "Who  could  foresee,  with  a  lim- 
ited metallic  circulation,  the  consequences  of  a  financial  catas- 
trophe, of  a  dearth,  of  a  deficit  in  the  production  of  gold  ? 
The  banks  would  be  forced  to  raise  their  discount  to  defend 
their  reserves,  and  that  rise  in  the  rate  of  discount,  in  the  ex- 
isting state  of  European  markets  and  with  a  single  metal, 
might  rapidly  assume  the  proportions  of  a  disaster.  It  was,  he 
urged,  good  policy  not  to  await  that  crisis,  but  to  foresee  and 
take  action  in  advance  of  it. 

Pierson,  of  the  Netherlands,  followed  with  a  further  ap- 


292  THE  CONFERENCE  OF  1881 

peal  for  a  bimetallic  agreement,  and  Broch,  of  Norway,  again 
came  to  the  defence  of  the  gold  standard.  In  the  latter's 
opinion,  a  fall  of  prices  from  the  exaggerated  rise  of  the  seven- 
ties was  salutary,  and  ought  not  in  the  least  to  be  disquieting, 
but  he  seemed  to  admit  that  a  scarcity  of  gold  might  occasion 
difficulties  when  he  said : 

"  Hitherto,  since  Europe  formed  her  existing  civilization  —  since 
the  fall  of  the  old  world,  as  it  was  called  —  it  was  France  who, 
from  the  first,  from  the  earliest  centuries  of  the  middle  ages,  always 
marched  at  the  head  of  the  social  movement.  This  time  she  has 
allowed  herself  to  be  outstripped  by  other  states.  Let  her  resume 
her  place;  let  that  defective  condition  called  the  limping  standard 
cease.  I  am  certain,  I  repeat,  that  that  is  the  only  definite  solution 
of  the  problem  we  are  here  studying.  How  fortunate  those  who, 
In  these  great  movements,  march  in  the  van!  —  theirg  are  the  facili- 
ties, theirs  are  the  advantages.  Woe  to  the  laggards,  to  the  last 
comers!  —  theirs  will  be  all  the  accumulated  difficulties;  theirs  will 
be  all  the  losses." 

The  position  of  the  United  States  from  a  practical  point  of 
view  was  first  given  by  ex-Senator  Howe  at  the  beginning  of 
the  seventh  session.  The  opinion  still  prevailed  extensively 
in  Europe  that  this  country  urged  bimetallism  upon  other 
nations  in  order  to  provide  a  market  for  its  silver,  and  it  was 
to  remove  this  that  Howe  quite  fully  explained  the  nature  of 
the  productive  wealth  of  his  country.  He  said  that  his  gov- 
ernment had  no  occasion  to  bull  the  market  for  silver  nor  to  be 
envious  of  the  popularity  of  gold,  for  in  the  same  nine  years 
the  mines  of  the  United  States  yielded  $55,000,000  more  of 
gold  than  of  silver.  Greater  interests  concerned  his  govern- 
ment, whose  people  were  farmers,  not  miners.  In  1879  the 
value  of  the  cotton  crop  was  more  than  seven  times  that  of  the 
annual  yield  of  silver;  the  wheat  crop  more  than  twelve  times; 
the  maize  crop  more  than  eighteen  times.  Statesmen,  he  said, 
should  be  slow  to  believe  that  his  government  had  turned  its 
back  upon  these  enormous  interests  in  order  to  storm  Euro- 
pean sentiment  on  behalf  of  that  comparatively  petty  interest 
embarked  in  silver  mines.  "  We  do  not  seek  a  pinched  market 
pining  for  our  so-called  precious  metals.  "We  rather  wish  to 


THE  ATTITUDE  OF  THE  UNITED  STATES  293 

fiud  a  busy  and  lusty  world  to  help  consume  the  really  precious 
fruits  of  our  agriculture.  We  seek  a  thrifty  world  to  pay  for 
them."  Speaking  of  the  immense  increase  in  commercial  fa- 
cilities within  two  decades  and  of  the  general  agreement  as  to 
the  soundness  of  the  principle  laid  down  by  the  European  dele- 
gates to  the  conference  of  1878  as  to  the  necessity  of  employ- 
ing both  metals  as  money,  silver  in  some  and  gold  in  others,  he 
asked  the  conference  how  it  would  proceed  in  the  division. 

"To  whom,  then,  shall  we  assign  silver?  To  whom  gold?  The 
professors  of  monetary  science  tell  us  there  is  a  scientific  principle 
upon  which  the  partition  may  be  made.  Unhappily,  they  do  not 
agree  as  to  that  principle.  In  one  school  we  are  taught  that  gold 
should  be  maintained  by  the  rich  nations  and  silver  by  the  poor.  In 
another  we  are  taught  that  gold  should  be  assigned  to  the  Western 
nations  and  silver  to  the  Eastern.  Either  principle,  in  application, 
would  lead  to  awkward  results.  This  conference  would  probably 
have  too  much  regard  for  economic  truth  to  assign  Germany,  Hol- 
land, Italy,  France,  and  the  United  States  to  the  category  of  poor 
nations,  and  surely  too  much  regard  to  geographical  truth  to  assign 
either  to  the  category  of  Eastern  nations.  Either  principle,  there- 
fore, would  require  those  five  states  to  throw  down  the  silver  stand- 
ard and  take  up  the  gold  standard.  Any  gentleman  can  calculate 
for  himself  what  a  supply  of  silver  would  thereby  be  thrown  upon 
the  market  and  what  a  demand  for  gold  would  be  made  upon  it. 
Under  such  a  movement  the  question  of  Mr.  Goschen  recurs  with 
portentous  significance  — Can  the  gold  be  had  without  a  tremendous 
crisis?  The  conference  of  1878  wisely,  as  I  must  think,  declined 
the  work  of  actual  partition.  It  affirmed  the  necessity  for  maintain- 
ing the  monetary  functions  of  silver,  as  well  as  those  of  gold,  but 
left  the  duty  of  maintaining  either  to  volunteers.  Their  language 
was:  '  The  selection  for  use  of  one  or  the  other  of  these  two  metals, 
or  of  both  simultaneously,  should  be  governed  by  the  special  situa- 
tion of  each  state  or  group  of  states.'  That  system  has  been  tried 
and  has  signally  failed.  The  volunteers  do  use  silver,  but  do  not 
maintain  its  monetary  functions.  It  is  the  function  of  money  to 
measure  and  to  determine  values.  Silver,  as  employed  by  the  volun- 
teers, does  not  determine  values:  on  the  contrary,  it  confuses  values; 
it  confounds  them.  It  is  self-contradictory;  it  reports  one  thing 
on  one  day  and  another  thing  on  the  day  following.  Such  is  the 
situation,  as  I  iinderstand  it.  with  which  we  are  confronted.  Silver 
must  be  maintained  in  the  standard  of  values.  Left  to  the  volun- 
tary choice  of  nations,  it  is  not  so  maintained.  We  have  no  common 
parliament  empowered  to  say  who  must  and  who  need  not  maintain 
it.  What  shall  be  done? 

"  The  government  of  the  United  States  steps  forward  to  say 
frankly  and  in  good  faith:  We  recognize  the  common  necessity 
affirmed  by  the  conference  of  1878;  we  are  ready  to  do  our  full  share 
to  meet  it;  we  will  stand  side  by  side  with  other  states  represented 
here,  in  maintaining  the  monetary  functions  of  both  metals;  we  will 


294  THE  CONFERENCE  OF  1831 

concert  with  you  the  proper  relations  between  the  two;  we  will  open 
our  mints  to  the  coinage  of  both  upon  such  rates  as  we  shall,  to- 
gether, deem  just,  and  upon  that  ratio  we  will  hold  each  to  be  the. 
peer  of  the  other  in  all  our  trade,  domestic  and  foreign.  If  any 
fairer  way  of  meeting  this  acknowledged  necessity  exists,  I  have 
not  heard  of  it,  and  I  cannot  conceive  it." 

Howe  treated  with  a  pleasantry  somewhat  tinctured  with 
sarcasm  the  efforts  of  the  Belgian  delegate  to  show  that  the 
alleged  monetary  malady  had  been  exaggerated  and  its  locality 
mistaken.  In  his  opinion  it  was  a  disease  that  had  fastened 
itself  upon  an  interest'  common  to  all  states  and  felt  chiefly 
by  the  most  enterprising  in  commerce.  It  consisted  not  so 
much  in  the  depreciation  of  silver  as  in  its  fluctuations;  com- 
merce could  adjust  itself  to  a  depreciation,  but  not  to  such  re- 
markable variations  as  had  ruled  in  the  silver  market.  After 
a  reply  to  the  different  arguments  against  the  adoption  of 
bimetallism,  he  said: 

"  I  venture  to  predict  we  shall  have  that  or  nothing.  I  have 
listened  with  interest,  but  wholly  without  sympathy,  to  the  various 
suggestions  which  have  been  offered  for  the  relief  of  the  silver 
market.  I  heard  the  candid  statement  made  by  the  honorable  dele- 
gate from  Germany  in  the  opening  of  these  deliberations  to  the 
effect  that  the  empire  will  proceed  with  caution  in  making  future 
sales  of  her  silver,  and  may  possibly  be  willing  to  coin  a  few  more 
discredited  millions.  I  heard  the  encouraging  suggestion  of  M. 
Pirmez  that,  when  Italy  shall  resume  specie  payments,  we  who  are 
limping  with  an  excess  of  silver  may  shove  some  5-franc  pieces  on 
her.  I  listened  to  the  flattering  idea  of  Dr.  Broch,  that  we  may  be 
able  to  stack  up  more  millions  in  India  and  the  East.  I  have  even 
heard  it  whispered  that,  rather  than  see  us  poor  cripples  actually 
sink,  some  of  the  gold-standard  states  might,  in  some  generous, 
Christian  mood,  consent  to  carry  a  little  more  of  this  leprous  silver. 
It  is  all  very  kindly  meant,  but  I  respectfully  submit  it  is  a  mis- 
taken kindness.  Let  me  repeat  once  more:  The  United  States 
government  does  not  seek  a  better  market  for  a  depreciated  coin. 
Its  purpose  is  to  reform  your  standard  of  value  by  extirpating  from 
it  all  depreciated  coins.  We  do  not  wish  to  load  any  of  our  sister 
states;  we  wish,  rather,  to  unload  them  all.  We  invite  you  to  a 
union  which  will  eradicate  depreciated  coin  from  our  monetary  sys- 
tem. If  you  cannot  accept  our  invitation,  do  not  seduce  us  into  a 
union  to  perpetuate  the  reign  of  such  coin.  .  .  . 

"  If,  as  is  so  confidently  predicted,  we  are  to  leave  this  confer- 
ence crowned  with  defeat,  it  is  not  for  me  to  say  what  course  our 
people  will  take,  for  I  do  not  know.  ...  If  you  persuade  them 
at  last  that  they  must  surrender  one  metal,  and  that  the  only  blanket 
which  can  give  warmth  is  the  golden  one,  they  may  conclude  to 
throw  away  all  bimetallic  rags  and  seek  for  a  part  of  that  blanket. 


INDIA'S  INTEREST  IN  SILVER  295 

I  know  quite  well  that  the  only  condition  upon  which  we  can  hope 
to  share  that  blanket  is  that  we  sell  to  the  world  more  than  we  buy 
from  it;  and  I  know,  as  M.  Pirmez  has  reminded  us,  how  delusive 
these  reported  balances  of  trade  may  be.  But  our  people  produce 
food,  and  food  is  a  prime  necessity  to  all  industry.  We  shall,  there- 
fore, hope  to  continue  to  trade  with  the  world  upon  some  terms;  and, 
besides,  when  I  learn  that  during  the  last  fiscal  year  the  deposits  of 
gold  at  the  mints  and  assay  offices  of  the  United  States  included 
not  only  $35,000,000  of  domestic  production,  but  $62,550,837  of  for- 
eign coin  and  bullion,  I  am  persuaded  that  what  we  call  the  balance  of 
trade  is  something  better  than  a  delusion." 

The  venerable  delegate  of  the  Netherlands,  who  had  been 
a  student  of  monetary  problems  for  more  than  forty  years,  and 
who  had  been  a  member  of  the  conference  of  1867,  reviewed 
the  history  of  coinage  in  Europe,  and  especially  in  his  own 
country  since  the  beginning  of  the  century,  and  said  that  after 
having  been  for  more  than  a  quarter  of  a  century  an  avowed 
partisan  of  unimetallism  he  had  come,  by  the  force  of  circum- 
stances, to  declare  himself  a  bimetallist,  but  on  the  express 
condition  of  this  system  being  adopted  and  put  in  operation  by 
a  considerable  group  of  states.  According  to  Vrolik's  pro- 
found conviction  that  was  the  only  remedy. 

One  of  the  most  interesting  addresses  of  this  session  was 
that  of  Sir  Louis  Mallet,  the  first  delegate  of  British  India, 
because  it  indicated  the  character  of  the  preliminary  induce- 
ments that  Great  Britain  was  inclined  to  make  to  promote  a 
bimetallic  arrangement  in  other  states.  Though  India  was 
not,  as  ho  understood,  invited  to  join  a  bimetallic  union,  her 
delegates  were  authorized  to  respond  to  the  desire  to  sustain 
the  price  of  silver  by  engaging  to  maintain  its  existing  system 
of  the  free  coinage  of  silver  having  full  legal-tender  quality 
through  British  India  during  a  certain  definite  period  to  be 
settled  by  future  negotiation.  But  his  government  could  only 
bind  itself  in  so  absolute  a  manner  on  condition  that  a  certain 
number  of  the  principal  states  of  the  world  would  engage  on 
their  part  to  maintain  within  their  territories  during  the  same 
period  the  free  coinage  of  silver,  with  full  legal-tender  quality, 
in  the  proportion  of  15.50  to  1.  His  government  had  done 


296  THE  CONFERENCE  OF  1881 

much  to  maintain  the  value  of  silver,  and  he  denied  that  it  was 
in  any  way  responsible  for  its  fall.  It  had  been  the  victim  of 
the  policy  of  others,  and  he  considered  that  India  had  a  cer- 
tain right  to  claim  an  endeavor  on  their  part  to  keep  up  the 
value  of  the  white  metal.  His'government  believed  that  a  se- 
rious evil  existed,  and  it  was  very  plain  from  the  Indian  point 
of  view.  British  India  not  only  faced  a  loss  in  the  remittance 
of  its  home  charges,  but  the  loss  sustained  in  trade.  For  each 
commercial  operation  two  calculations  had  become  necessary. 
The  price  of  goods  must  first  be  calculated  in  gold,  and  then 
the  price  of  gold  in  silver,  and  for  the  latter  no  exact  basis  for 
calculation  existed.  Pointing  out  other  losses  because  of  the 
instability  in  the  price  of  silver,  he  said  that,  in  his  opinion,  a 
bimetallic  standard  would,  under  all  circumstances,  be  more 
stable  than  a  single  standard;  and  he  considered  a  depreciating 
standard  superior  to  an  appreciating  one.  He  believed  gold  to 
be  insufficient  for  the  needs  of  the  world,  even  were  it  not 
needed  by  certain  states  for  displacing  paper  money,  and,  con- 
trary to  the  Belgian  delegate,  he  considered  bimetallism  as 
possessing  a  scientific  basis,  a  theory  in  entire  conformity  "  with 
those  great  economic  laws  which  must  always  control  the  acts 
of  the  legislator  and  the  fate  of  nations,  and  will  continue  to 
do  so  more  and  more."  He  concluded  by  expressing  the  belief 
that  with  persistency  and  patience  the  reform  could  be  carried 
out  in  spite  of  the  difficulties  that  seemed  to  be  presented  by 
states  announcing  their  inability  to  become  parties  to  a 
bimetallic  treaty. 

The  Spanish  delegate,  using  the  remarks  of  Sir  Louis  Mal- 
let as  a  pretext,  again  reminded  the  conference  of  the  practical 
problems  that  were  before  it.  In  the  Anglo-Indian  empire 
there  existed  a  double  monometallism,  gold  monometallism  in 
Great  Britain,  silver  monometallism  in  India.  The  embar- 
rassments and  losses  resulting  from  this  system  were  admitted. 
It  was  natural,  therefore,  said  Prendergast,  to  inquire  whether 


FORSSELL  ARGUES  FOR  MONOMETALLISM  297 

there  might  not  bo  some  means  fur  the  welfare  of  England  and 
India  as  well  as  of  the  whole  civilized  world,  of  converting  into 
bimetallism  this  divergent  and  injurious  double  monometal- 
lism. He  thought  the  solution  of  the  problem  might  be  facili- 
tated by  the  discovery  of  a  ratio  between  the  two  metals,  to 
act  so  that,  with  Indian  silver,  gold  might  be  procured  in 
England,  and  with  British  gold  a  fixed  quantity  of  Indian 
silver.  The  Bank  of  England  under  the  Peel  Act  had  the 
power  of  forming  its  metallic  stock  of  both  metals,  admitting 
silver  as  one-fourth  of  the  gold.  If  this  action  were  given  an 
obligatory  character,  said  Prendergast,  it  would  enable  any 
holder  of  silver  to  obtain  Bank  of  England  notes  within  the 
limits  of  one-fourth  of  that  stock,  and  this,  he  considered, 
might  raise  the  value  of  silver  and  suffice  to  change  the  mone- 
tary situation  in  India. 

The  English  delegate  replied  that  his  government  would 
not  fail  to  take  into  very  serious  consideration  these  observa- 
tions. He  knew  it  would  be  glad  to  be  able,  without  modify- 
ing the  situation  in  which  it  was  placed,  and  without  re- 
nouncing the  gold-standard  system,  to  find  a  means  of  giving 
its  co-operation  in  the  work  undertaken  by  the  conference, 
the  restoration  of  the  value  of  silver. 

Forssell,  the  Swedish  delegate,  continued  the  discussion  for 
the  monometallic  side,  and  asked  if  it  were  not  plain,  after 
making  allowances  for  all  the  new  professions  of  bimetallism, 
that  that  system  always  lacked  the  support  it  needed  in  order 
to  pass  from  resolutions  into  facts.  Replying  for  himself,  he 
said : 

"  As  sentiment  and  international  courtesy  stand  for  nothing  in 
this  matter,  it  is  vain  to  say  and  to  repeat  that  the  Bank  of  France 
has  in  a  few  years  lost  900,000.000  francs  in  gold,  and  increased  by 
700,000,000  francs  its  stock  of  silver:  that  it  will  lose  still  more  of 
what  it  wants  to  keep  and  receive  still  more  of  what  embarrasses  it. 
It  is  vain  to  prove  that  the  Bank  of  Holland  is  suffering  from  an  un- 
bearable glut  of  silver.  It  is  vain  to  declare  that  the  supreme 
urgency  of  an  economic  and  financial  reform  in  Italy  will  force  the 
whole  world  to  reverse  its  monetary  blunders.  Neither  one  nor  the 


298  THE  CONFERENCE  OF  1881 

other  will  '  convert '  Germany  and  England  to  the  bimetallic  system, 
unless  there  is  in  the  economic  and  monetary  situation  of  those  two 
states  themselves  a  motive  power,  so  to  speak,  strong  enough  to 
triumph  over  the  natural  force  of  their  monometallist  inertia." 

He  then  proceeded  to  argue  that  bimetallism  would  be  a 
bad  system  if  tried  under  any  circumstances,  for  a  treaty 
would  demand  engagements  which  at  any  moment  might  lead 
to  the  detriment  or  ruin  of  the  contractors.  It  would  be  sell- 
ing the  monetary  independence  of  a  country  for  a  system  of 
mutual  dependence,  of  constant  cavilling  and  of  inevitable 
risks.  Seeing  no  danger  of  the  adoption  of  the  bimetallic 
system,  he  considered  the  essential  point  in  the  monetary  evo- 
lution, the  subject  of  real  and  universal  interest,  not  the  de- 
preciation of  silver,  the  results  of  which  on  the  holders  of 
silver  would  be  of  secondary  importance,  but  that  fresh  de- 
mand for  gold  which  would  result  neither  from  the  arbitrary 
acts  of  government  nor  from  the  theories  of  a  savant,  but  from 
the  requirements  of  commerce.  With  a  view  to  reaching  a  de- 
cision as  to  the  possibilities  of  economizing  the  use  of  gold,  he 
proposed  this  question  to  the  conference :  "  Is  there  ground 
for  facilitating  and  for  supporting  by  acts  of  legislation  af- 
fecting coinage  and  fiduciary  circulation  such  economy  in  the 
use  of  gold  as  the  progressive  adoption  of  the  single  gold 
standard  will  cause  the  states  represented  in  the  conference  to 
feel  the  need  of  ?" 

At  this  point  Baron  von  Thielmann,  referring  to  the  declara- 
tion he  had  made  in  the  name  of  his  government  at  the  second 
session,  thought  it  right  to  remark  that  the  declaration  did 
not  contain  offers  made  by  the  imperial  government  to  the 
powers  represented  at  the  conference.  He  had  confined  him- 
self to  uttering  the  opinion  that  perhaps  the  German  govern- 
ment would  take  into  consideration  concessions  with  a  view 
to  an  eventual  arrangement  calculated  to  raise  the  price  of 
silver.  The  ulterior  decision  of  the  imperial  government  was 
not  prejudged  either  by  its  participation  in  the  conference  or 


POSITION  OP  THE  GOLD  MONOMETALLIST8  299 

by  the  observations  of  its  delegates.  He  said  the  object  of 
this  statement  was  not  to  correct  any  of  the  opinions  formu- 
lated within  the  conference,  but  to  reduce  to  their  true  value 
the  exaggerated  comments  of  a  certain  portion  of  the  press. 

The  Portuguese  delegate  reviewed  the  history  of  the  coin- 
age laws  in  his  country  to  disprove  an  assertion,  he  said,  of 
Cernuschi,  that  actual  bimetallism  could  exist.  He  said  that 
the  gold  standard  was  adopted  by  Portugal  because  it  found 
that  it  could  not  at  any  ratio  it  fixed  keep  both  metals  in  cir- 
culation. Cernuschi,  without  replying  to  this  argument, 
closed  the  session  with  the  remark  that  it  had  been  charac- 
terized by  warnings  of  the  perils  of  monometallism  from  Asia 
on  the  one  side  of  the  world  and  America  on  the  other  side, 
both  urging  the  adoption  of  bimetallism,  while  that  system 
had  been  deprecated  by  Sweden  and  Portugal.  He  said  it  in 
a  manner  to  remind  the  conference  how  small  the  interests  of 
the  two  latter  countries  were  compared  with  those  of  two  con- 
tinents. 

Pirmez  opened  the  discussion  of  the  eighth  session,  the 
19th  of  May,  or  just  a  month  after  the  beginning  of  the  con- 
ference, with  a  reply  to  some  of  the  criticisms  the  bimetal- 
lists  had  made  of  his  previous  remarks.  He  said  that  the  only 
point  governing  the  debate,  and  the  only  one  he  had  treated, 
was  the  possibility  of  establishing  a  fixed  ratio  between  the 
two  metals.  He  denied  any  intention  of  making  any  propa- 
ganda against  silver  and  in  favor  of  gold;  or  any  wish  to  see 
new  countries  adopt  the  gold  standard  or  any  design  of  nar- 
rowing the  functions  of  silver.  He  simply  rejected,  as  contrary 
to  the  nature  of  things,  the  theory  of  bimetallism  at  a  fixed 
ratio.  He  then  pointed  out  the  differences  between  the  bimetal- 
lists  of  the  dogmatic  and  of  the  rational  schools,  and  said  the 
conference  might  well  leave  it  to  them  to  refute  each  other,  and 
to  show  that  a  fixed  ratio  was  unattainable.  The  dogmatic 
bimetallism  of  Cernuschi,  Rusconi,  and  Horton  assumed  the 


300  THE  CONFERENCE  OF  1881 

omnipotence  of  law.  While  starting  from  an  inadmissible 
principle,  they  were  irreproachably  logical  in  their  deductions. 
The  rational  bimetallism  of  Vrolik  and  others,  on  the  other 
hand,  started  from  true  principles,  but  failed  in  logic.  He  took 
up  the  arguments  of  the  bimetallists,  one  by  one,  in  an  effort  to 
show  that  in  practice  they  all  led  to  the  inevitable  conclusion 
—  a  gold  standard  for  all  the  great  commercial  nations  in  the 
future.  Belgium's  hopes,  he  said,  lay  in  that  direction. 

"  "Will  M.  Pirmez  kindly  answer  one  question  ?"  asked 
Count  Rusconi.  "  What  is  money  ?" 

"  It  is  merchandise;  but  merchandise  weighed  and  verified 
by  the  state,"  replied  Pirmez. 

"  If  the  conference  makes  that  declaration,"  said  the 
Count,  "  all  debate  is  certainly  at  an  end,  and  the  law  of  bi- 
metallism and  of  the  ratio  becomes  absurd  and  impossible." 

Seismit-Doda,  of  Italy,  and  Horton,  of  the  United  States, 
each  contributed  arguments  to  the  opposite  view  of  money, 
enlarging  upon  the  influence  of  law  in  the  determination  of 
the  value  and  use  of  the  metals.  Cernuschi  made  another 
plea  for  bimetallism,  calling  attention  to  the  fact,  which  was 
not  denied,  that  the  heads  of  all  the  great  European  banks 
were  favorable  to  bimetallism.  France,  he  said,  was  not  the 
country  most  menaced;  silver  5-franc  pieces  were  at  par  with 
gold,  the  budget  showed  no  loss  from  the  monetary  disorder 
as  did  the  Indian  budget,  and,  in  asking  for  bimetallism,  she 
was  only  asking  for  the  universal  good. 

The  most  striking  appeal  for  international  bimetallism 
of  this  session  and  the  closing  one  in  the  general  de- 
bate, was  that  of  ex-Secretary  Evarts.  It  was  an  able  review 
of  the  whole  question  from  an  international  point  of  view. 
He  reasoned  that  there  were  only  two  logical  methods  by 
which  the  disorder  between  gold  and  silver  could  be  stopped; 
one  was  to  admit  as  the  intrinsic  money  of  the  world  only  one 
metallic  basis,  and  "  to  drive  out,  extirpate,  as  a  barbarism,  as 


PLEA  OF  EX-SECRETARY  WILLIAM  M.  EVARTS  801 

an  anachronism,  as  a  robber  and  a  fraud,  the  other  metal,  that, 
grown  old  in  service  and  feeble  in  its  strength,  is  no  more  a 
help,  but  a  hinderance  and  a  marplot  ";  the  other  was  to  make 
one  money  out  of  two  metals,  adapted  in  its  multiples  and 
divisions  to  the  united  functions  of  the  two  precious  metals. 
He  defined  the  plan  to  divide  the  world  into  two  camps,  one 
using  gold  and  the  other  silver,  as  one  of  harmonious  discord 
and  organized  disorder.  "  The  motion,"  he  said,  "  seems  to  be 
that  the  nations  that  sit  above  the  salt  are  to  be  served  with 
gold,  and  those  that  sit  below  the  salt  are  to  be  served  with 
silver.  But  who  is  to  keep  us  in  our  seats?  Who  is  to  guard 
against  an  interruption  of  the  feast  by  a  struggle  on  the  part 
of  those  who  sit  below  the  salt  to  be  served  with  gold,  and 
of  those  above  the  salt  to  be  served  with  silver  ?  This  project 
purports  to  have  neither  wisdom  nor  courage,  neither  reason 
nor  force  behind  it.  It  is  a  mere  fashion  of  speech  for  saying 
that  \ve  cannot,  by  human  will,  by  the  power  of  polity  of  na- 
tions, redress  the  mischief,  but  that  we  must  leave  the  ques- 
tion to  work  itself  out  in  discord,  in  dishonor,  in  disorder,  in 
disaster."  After  reviewing  in  an  instructive  manner  the  main 
arguments  against  international  bimetallism,  he  closed  by  say- 
ing: 

"  In  my  judgment,  the  progress  which  has  been  made  here,  the 
comparison  of  opinions,  the  indication  of  the  interests  of  governments 
behind,  all  point  to  a  general  desire  for  a  good  result  from  our  de- 
liberations, which  is  an  augury  of  success,  for  '  where  there's  a  will 
there's  a  way.'  I  cannot  believe  that  England  can  long  occupy  the 
position  of  estrangement  from  either  of  the  systems  about  which 
we  debate.  The  British  Empire  is  neither  monometallist  nor  bi- 
metallist,  but  bimonometallist.  The  British  Empire  cannot  be 
monometallist  gold  nor  monometallist  silver  through  its  length  and 
breadth.  Its  present  position  of  bimonometallism  is  entirely  in- 
consistent with  reason  and  with  government.  It  must  be  bimetallic 
sooner  or  later,  for  it  cannot  maintain  the  permanent  position  of  a 
house  divided  against  itself,  which  cannot  stand.  At  this  stage, 
then,  of  the  deliberation,  without  entering  into  a  discussion  of  de- 
tails, it  seems  to  me  that  the  moment  is  most  opportune  and  the 
spirit  most  excellent  for  a  recess  for  some  weeks.  In  this  interval 
we  may  expect  a  definite  and  practical  consideration  by  the  various 
governments  of  what  the  duty  and  interest  of  each  require  from  it 
towards  the  common  end  they  desire." 


302  THE  CONFERENCE  OF  1881 

The  Spanish  delegate  then  asked  leave  to  renew  his  motion 
for  adjournment.  In  addition  to  the  declarations  he  had 
already  mentioned,  he  called  attention  to  the  assurance  the 
British  delegates  gave  of  a  friendly  reception  reserved  by 
their  government  for  any  suggestion  tending  to  improve  the 
situation  in  the  money  market,  and  to  the  confirmation  Glad- 
stone had  just  given  this  sentiment  in  the  House  of  Commons. 
He  believed,  under  the  circumstances,  that  some  kind  of  an 
agreement  was  possible.  It  had  at  least  been  shown  that  it 
was  very  desirable,  for,  he  said,  if  Europe  had  another  year's 
bad  harvest  and  France  was  obliged  to  import  much  of  her 
food  from  abroad,  the  Bank  of  France,  not  having  a  sufficient 
supply  of  gold  remaining,  would  have  to  apply  to  the  Bank 
of  England,  which,  seeing  its  stock  diminish,  would  have  to 
raise  its  rate  to  those  panic  figures  which  lead  to  incalculable 
disaster.  Then  would  come  one  of  those  panics  from  which, 
to  use  the  expression  of  an  illustrious  man,  they  could  only 
emerge  by  marching  over  corpses,  and  the  pernicious  influence 
of  which  would  be  felt  by  the  whole  world.  The  question  of  a 
remedy  was  no  longer  under  the  jurisdiction  of  the  conference, 
in  his  judgment,  but  of  the  governments  it  represented.  He, 
therefore,  submitted  this  resolution : 

"  The  conference,  having  listened  to  a  general  discussion,  having 
considered  the  monetary  situation  from  an  international  point  of 
view  —  in  view  of  the  declarations  which  have  been  made  on  behalf 
of  a  certain  number  of  governments,  considering  that  several  dele- 
gates have  evinced  a  desire  for  a  temporary  suspension  of  the  ses- 
sions, so  as  to  refer  to  their  governments,  in  order  that  the  latter 
may  be  in  a  position  to  pronounce  on  the  propositions  which  have 
been  formulated  within  the  conference  and  on  the  resolutions  to  be 
taken  for  co-operating  in  the  rehabilitation  of  silver—  Resolves,  the 
sessions  of  the  conference  are  suspended  from  the  19th  of  May  to  the 
30th  of  June  next." 

In  the  debate  on  this  resolution  the  Indian  delegate,  Lord 
Reay,  made  some  extended  remarks,  which  were  evidently  in- 
spired to  a  great  extent  by  the  British  government.  The 
English  delegate  seemed  to  be  in  attendance  for  the  especial 


INDIA  SPEAKS  FOR  ENGLAND  803 

purpose  of  manifesting  English  reserve,  whenever  it  appeared 
to  be  called  for  by  the  circumstances,  while  the  Indian  delegate 
was  used  as  the  instrument  of  encouraging  the  other  states  to 
make  a  more  extended  use  of  silver,  or  to  do  anything  that 
would  promise  a  relief  for  the  possible  gold  famine  in  England. 
Only  by  appreciating  this  arrangement  does  the  concern  with 
which  England  was  watching  the  developments  of  the  con- 
ference, and  her  desire  to  surreptitiously  promote  a  bimetallic 
agreement  in  other  states,  and  especially  to  include  the  United 
States,  become  fully  apparent.  With  this  understanding  of 
Lord  Reay's  position  his  remarks  following  the  introduction  of 
the  resolution  become  as  significant  and  as  interesting  as  the 
declaration  of  the  German  delegate  a  month  before.  The 
real  attitudes  of  England  and  of  Germany  were  quite  similar 
in  one  respect.  Neither  proposed  to  enter  into  any  agreement 
involving  their  adoption  of  the  double  standard,  but  both 
were  anxious  to  make  apparent  concessions  so  as  to  induce 
some  other  countries  to  open  their  mints  to  silver.  The  Ger- 
man delegate  had,  from  the  beginning,  been  laboring  to  induce 
the  conference  to  dispense  with  the  theoretical  discussion  and 
descend  to  the  consideration  of  the  inducements  he  had 
offered,  and  to  which  it  Avas  likely  England  would  add  some- 
thing when  the  opportune  moment  arrived.  Lord  Reay  began 
by  expressing  the  opinion  that,  before  separating,  it  would  be 
well  to  define  precisely  the  situation  in  which  the  conference 
found  itself.  He  said: 

"  If,  on  the  one  hand,  it  is  clear  that  neither  monometallist  nor 
bimetallist  has  been  shaken  in  his  convictions,  it  is  clear,  on  the 
other,  that  both  monometallists  and  bimetallists  have  learped  to 
respect  each  other.  .  .  .  With  one  or  two  slight  exceptions,  the 
general  inconvenience  of  the  existing  state  of  things  has  been  recog- 
nized. Its  victims  are  to  be  found  both  in  bimetallic  and  monometal- 
lic countries.  So  far,  neither  of  the  systems  has  succeeded.  In  this 
state  of  things  it  is  clear  that  the  concert  which  it  is  wished  to  es- 
tablish must  either  be  made  between  the  powers  which  desire  to 
remain  monometallist  and  those  which  are  or  tend  to  become  bi- 
metallist, or  not  be  made  at  all.  Coming  to  practical  steps,  it  ap- 
pears to  me  that,  in  the  first  place,  it  would  be  important  to  ap- 


304  THE  CONFERENCE  OF  1881 

proach  the  government  of  His  Imperial  and  Royal  Apostolic  Majesty 
with  a  view  to  obtain  its  adhesion  to  the  union  which  the  United 
States  and  the  Latin  Union  desire  to  establish.  The  concurrence 
of  Austria-Hungary  would  be  of  the  very  highest  importance  in 
giving  to  the  states  above  mentioned  a  powerful  support  for  the 
realization  of  their  wishes,  even  though  Austria-Hungary  should  not 
substitute  specie  payments  for  its  paper  money  at  once. 

"  I  should  like  also  to  submit  for  your  consideration  a  proposal 
for  asking  the  opinion  of  the  principal  banks  of  issue  in  the  different 
states.  It  is  obvious  that,  even  in  the  states  which  have  a  single 
gold  standard,  these  institutions  could  render  valuable  assistance 
in  the  operations  resulting  from  a  resumption  of  the  free  coinage  of 
silver  in  other  states.  The  eminent  men  who  direct  them,  and  we 
must  not  forget  that  the  Imperial  Bank  of  Germany  is  directly  sub- 
ject to  the  Chancellor  of  the  Empire,  could  remove  many  of  the 
difficulties  which  would  attend  the  governments  who  undertook  to 
rehabilitate  silver." 

After  an  allusion  to  the  theories  of  the  bimetallists  and  the 
devotion  to  their  cause  of  such  advocates  as  Cernuschi,  he  con- 
tinued : 

"  But,  gentlemen,  to  avoid  the  danger  which  threatens  us,  we 
want  something  besides  philosophers  and  philosophic  theories;  we 
must  have  diplomacy;  on  our  reassembling  we  must  lend  an  ear  to 
the  monometallic  and  bimetallic  statesmen  in  order  to  effect  a 
modus  vivendi  between  the  powers  adhering  to  the  different  systems. 
The  habits  of  English  statesmen  tend  to  make  them  consider  facts, 
to  seek  rather  what  is  relatively  possible  than  what  is  absolutely  im- 
possible. If  it  is  desired  to  embark  on  the  enterprise  of  introduc- 
ing the  bimetallic  system  into  the  United  Kingdom,  you  cannot  do 
better  than  practise  what  you  preach,  and  begin  the  task  by  in- 
troducing bimetallism  at  home.  India  has  suffered  for  the  mono- 
metallic cause  ;  it  would  be  another  glory  for  the  bimetallists  to  ac- 
cept, in  order  to  inaugurate  the  universal  reign  to  which  they  look 
forward,  the  slight  burden  of  some  inconveniences,  which,  on  their 
own  showing,  will  be  only  temporary.  The  surplus  in  the  French 
budgets  and  the  brilliant  conversion  of  a  portion  of  their  debt  just 
effected  by  the  United  States  establish  in  a  most  remarkable  manner 
that  their  marvellous  financial  position  is  strong  enough  to  permit 
of  their  making  the  experiment  of  bimetallism. 

"  On  the  part  of  Great  Britain  and  India,  I  must  decline  both  the 
extreme  honor  and  the  extreme  disgrace  which  the  partisans  and 
adversaries  of  bimetallism  confer  upon  them  when  they  pretend  that 
with  these  two  empires  all  is  possible,  and  without  them  nothing. 
Her  Majesty's  government  has  testified  on  many  occasions  its  desire 
to  create  and  maintain  intimate  relations  between  the  different 
powers.  It  is  convinced  that  these  relations  are  a  guarantee  for  the 
peace  and  prosperity  of  the  nations.  Its  resolution  not  to  join  a 
bimetallic  convention  is  inspired  neither  by  selfishness  nor  by  a  dis- 
regard for  the  interest  of  other  countries.  I  flatter  myself,  gentle- 
men, that  you  will  render  justice  to  the  government  of  my  august 
sovereign,  and  that  you  will  not  forget  that  the  commerce  of  the 
world  enjoys  in  her  country  a  freedom  from  duty  and  obstruction 


THE  ADROIT  HAND  OP  ENGLAND  305 

which  is  certainly  far  from  being  either  selfish  or  universally  adopted. 
In  matters  of  free  trade  it  did  iiot  wait  for  the  co-operation  of  other 
countries  to  apply  principles  which  it  believed  to  be  true.  Be  as- 
sured, also,  that  if  you  succeed  in  giving  practical  effect  to  the 
principles  of  bimetallism  without  our  co-operation,  we  shall  be  the 
first  to  render  to  you  the  homage  which  has  always  been  paid  in  my 
country  to  any  work  which  has  for  its  object  to  draw  closer  the 
bonds  which  unite  nations. 

"  The  great  problem,  gentlemen,  which  we  have  to  solve  cannot 
be  determined  in  a  moment,  and  there  is  no  reason  for  discourage- 
ment in  the  conviction  at  which  we  have  arrived,  that  all  the  powers 
are  not  of  the  same  opinion.  It  is  not  in  ignoring  the  difficulty, 
but  in  recognizing  it,  that  we  can  overcome  it.  The  delegates  of 
the  United  Kingdom,  of  India,  and  of  Canada  will  have  the  honor 
of  sharing  in  your  further  labors,  animated  by  the  generous  in- 
stincts with  which  we  have  been  hitherto  guided,  and  which  are 
the  best  guarantee  for  the  ultimate  success  of  an  agreement,  which 
will  not,  perhaps,  realize  all  the  dreams  of  theory,  but  which  will  be 
worthy  of  the  statesmen  from  whom  we  ask  it  and  on  whose  co- 
operation alone  it  depends." 

The  adroit  hand  of  England,  fearful  that  nothing  would 
be  done  for  silver  by  somebody  else,  is  apparent  in  every  line 
of  this  remarkable  statement.  Nothing  but  a  fear  that  Austria 
might  produce  a  crisis  by  resolving  to  resume  specie  payments 
in  gold  could  have  suggested  the  special  desirability  of  her 
becoming  attached  at  that  time  to  a  union  for  the  free  coin- 
age of  silver.  The  suggestion  of  securing  the  opinion  of  the 
heads  of  the  banks  of  issue  will  be  explained  in  the  proceed- 
ings of  the  conference  after  its  reassembling.  The  Bank  of 
England  would  offer  to  hold  a  fifth  of  its  reserves  in  silver. 
The  remainder  of  the  speech  is  an  argument  to  show  that 
France  and  the  United  States  were  strong  enough  to  assure 
the  success  of  a  bimetallic  convention,  or  at  least  to  make  the 
experiment.  Nothing  would  have  suited  England  better  than 
such  an  experiment  —  the  opening  of  our  mints  and  those 
of  the  Latin  Union  to  silver,  and  the  assurance  that  Austria 
would  not  undertake  to  introduce  a  gold  standard.  Germany's 
hopes  were  of  the  same  character.  The  concessions  the  latter 
offered  would  have  made  the  complete  accomplishment  of  her 
monetary  reform  slow  work,  but  unless  something  was  done 
it  seemed  absolutely  impossible,  even  in  the  remote  future. 
20 


306  THE  CONFERENCE  OF  1881 

After  some  unimportant  debate  as  to  the  proper  length  of 
the  suspension  of  the  conference,  the  resolution  of  the 
Spanish  delegate  was  adopted.  It  was  voted,  also,  to  ask  the 
different  governments  to  secure  the  opinion  of  the  large  banks 
of  issue.  The  United  States  delegates  were  asked  to  learn 
what  steps  could  be  taken  in  their  country  to  have  gold  and 
silver  placed  on  the  same  footing  in  the  banks,  which  were 
then  discriminating  against  the  new  silver  dollars,  and  the 
conference  adjourned. 

The  intermission  of  six  weeks  resulted  in  some  interesting 
developments,  but  in  nothing  practicable.  The  attitudes  of 
the  powers,  whose  co-operation  was  necessary,  did  not  furnish 
ground  for  great  expectations.  Desirous  as  the  United  States 
and  France  were  for  an  agreement  favorable  to  silver,  they 
were  not  disposed  to  take  up  with  professed  concessions  which 
really  conceded  nothing,  but  in  themselves  constituted  a  re- 
fusal to  co-operate.  Anxious  as  England  and  Germany  were 
that  the  United  States,  the  Latin  Union,  and  Austria  should 
agree  to  open  their  mints  to  silver,  they  did  not  propose  to 
yield  any  of  the  essentials  of  their  monetary  systems  so  long 
as  there  was  reason  for  hoping  that  a  bimetallic  arrangement 
would  result  without  further  inducements  from  them.  Cer- 
nuschi  had,  unfortunately,  in  one  of  his  speeches  afforded 
ground  for  such  a  hope,  though  without  intending  it.  In  the 
fifth  session,  while  expressing  the  wish  for  real  bimetallism,  he 
had  said :  "  It  is  practicable  with  four  states,  with  three,  or 
even  with  two.  Yes,  the  bimetallic  union  would  be  supreme  in 
the  world  even  if  composed  only  of  the  United  States  and 
France."  This  was  a  remarkable  statement  to  follow  his  an- 
nouncement at  the  outset  of  the  conference  that,  failing  the 
co-operation  of  Germany  and  England,  or,  at  least,  one  of 
them,  bimetallism  would  be  impracticable.  Cernuschi  was 
strong  in  bimetallic  polemics,  but  he  was  not  a  diplomat,  and 
the  German  and  English  delegates  might  reasonably  have 


THE  CONFERENCE  REASSEMBLES  307 

inferred,  even  if  they  did  not,  that  a  limetallisme  a  deux 
would  be  adopted  whether  they  made  concessions  or  not.  Ex- 
Senator  Howe  had  afforded  them  no  such  consoling  hope  in  his 
remarks  when  he  said  that  he  had  listened  to  the  so-called 
concessions  with  interest,  but  without  sympathy,  and  that  it 
was  a  mistaken  kindness  to  make  such  offers,  inasmuch  as  the 
United  States  were  not  seeking  a  market  for  a  depreciated 
metal;  but  this  need  not  have  changed  the  opinion  of  the 
English  and  German  delegates,  who  knew  that  Howe  was  dip- 
lomatic and  that  Cernuschi  was  not.  The  suspension  of  the 
proceedings  gave  the  American  and  French  delegates  time 
to  consider  and  to  conclude  that  the  offers  of  the  English  and 
German  governments  were  insufficient.  The  latter  occupied 
the  time  in  the  expectations  that  their  offers  would  suffice, 
though  England  had  something  in  the  shape  of  an  inducement 
in  reserve.  When,  therefore,  the  conference  reassembled  on 
June  30,  each  side  was  uncertain  what  course  the  other  would 
adopt. 

The  president,  in  calling  the  conference  to  order,  asked 
it  to  fix  the  order  of  its  proceedings,  the  general  discussion 
having  been  completed.  At  the  beginning  it  had  been  deter- 
mined to  follow  the  general  discussion  with  a  consideration  of 
each  question  separately;  but,  while  this  might  be  done,  he 
thought  that  after  a  separation  of  six  weeks,  and  particularly 
after  the  governments  had  been  informed  concerning  the  situa- 
tion in  the  conference,  it  would  be  well  to  adjourn  for  a  day  or 
two,  that  the  delegates,  in  private  conversation,  might  ex- 
change views  and  settle  their  course.  The  suggestion  was 
supported  by  the  Governor  of  the  Bank  of  France,  and  was 
adopted.  All  parties  were  desirous  of  learning  the  exact  situa- 
tion before  saying  much. 

Several  replies  to  questions  propounded  by  Cernuschi  and 
others  in  the  earlier  proceedings  were  submitted  at  this  session, 
but  the  most  important  document  laid  on  the  table  was  a  com- 


308  THE  CONFERENCE  OF  1881 

munication  from  Moritz  Levy,  the  Danish  delegate,  to  the 
president  of  the  conference.  It  attracted  little  attention  at 
this  time,  but  became  one  of  the  subjects  of  special  considera- 
tion eleven  years  later,  at  another  conference.  Levy  had  said 
very  little  in  the  debate,  but  evidently  had  given  the  prac- 
tical phases  of  the  question  much  thought.  As  private  busi- 
ness prevented  his  return  to  Paris  to  participate  in  the  later 
deliberations,  he  wrote  a  letter  embodying  his  views. 

He  had  not  been  able,  he  said,  to  persuade  himself  of  the 
advantages  of  bimetallism,  but  he  was  not  prepared  to  deny 
that  the  existing  situation  might  lead  to  difficulties,  if  pro- 
longed for  any  considerable  time.  The  fall  in  the  price  of 
silver,  he  admitted,  constituted  an  obstacle  to  the  development 
of  commercial  relations  between  many  countries  of  Europe 
and  the  countries  of  Eastern  Asia,  and  an  increasing  difficulty 
to  those  countries  having  a  large  amount  of  silver  in  their  cir- 
culation. The  scarcity  of  gold  he  could  not  deny,  and  he 
feared  that  the  existing  stock,  together  with  the  annual  yield, 
would  not  be  enough  to  allow  of  Europe  submitting  longer  to 
so  heavy  an  exportation  of  this  metal  as  had  been  witnessed  for 
the  previous  three  years  without  compelling  a  resort  to  meas- 
ures necessary  in  periods  of  monetary  crisis.  This  being  the 
situation,  the  only  remedy  he  could  suggest  would  be  a  more 
restricted  use  of  gold  and  a  more  extended  use  of  silver.  In  his 
opinion,  silver  must  become  in  a  much  greater  degree  a  neces- 
sary part  of  the  circulation  needed  for  the  smaller  domestic 
business  of  each  country,  while  gold  must  serve  only  as  the 
metallic  reserve,  guaranteeing  the  notes  of  banks  issued  in 
larger  sums,  and  as  the  means  of  settlement  in  international 
transactions.  Both  of  these  objects,  he  thought,  would  be  at- 
tained if  all  the  states  represented  at  the  conference,  or,  at 
least,  the  seven  great  powers,  France,  England,  Germany,  Rus- 
sia, Austria-Hungary,  Italy,  and  the  United  States,  would 
unite  in  the  adoption  of  the  following  measures : 


THE  LEVY  PLAN  309 

I.  Retire  from  circulation  all  notes  of  a  nominal  value  of 
less  than  20  francs,  or  an  amount  corresponding  thereto  in 
other  denominations. 

II.  Retire  from  circulation  all  gold  pieces  of  less  than  20 
francs. 

While  the  principle  of  Levy's  plan  was  not  new,  he  car- 
ried it  further,  proposing  to  give  it  a  wider  application.  Ger- 
many had  expressed  a  willingness  to  withdraw  her  5-mark 
gold  pieces,  and  the  Russian  delegate  had  suggested  that  the 
measure  be  extended  to  gold  coins  corresponding  to  the  10- 
franc  and  10-mark  pieces,  but  Levy  considered  that  such  an 
operation,  undertaken  by  itself,  would  prove  insufficient  un- 
less accompanied  by  the  withdrawal  of  all  small  notes,  for  he 
had  found  that  silver  was  driven  away  much  more  by  small 
bank  notes  than  by  little  gold  pieces,.  Unless  the  notes  were 
withdrawn,  the  gold  turned  into  the  reserves  would  be  likely 
to  be  replaced  by  more  notes,  instead  of  silver;  but  if  with- 
drawn and  their  place  taken  by  silver,  the  burden  on  the  re- 
serves would  be  lightened  and  more  gold  made  available  for  in- 
ternational settlements.  He  estimated  the  notes  having  a  face 
value  less  than  20  francs  in  circulation  in  the  seven  great  coun- 
tries as  follows: 


50.000,000  francs. 

430,000,000      " 

1,000,000,000      " 

559.000,000       " 

230.000.000       " 


Germany,  notes  of  5  marks, 
Austria-Hungary,  notes  of  1  and  5  florins, 
Russia,  notes  of  1,  2,  and  3  troubles,  about 
Italy,  notes  of  %,  1,  2,  5,  and  10  francs. 
United  States,  notes  of  1  and  2  dollars,  . 

Total 2,269,000,000      " 

Making  allowance  for  the  gold  pieces  that  had  been  melted 
down  or  exported,  he  estimated  the  amount  in  circulation  to 
be: 

Germany,  pieces  of  5  and  10  marks,       .          .  250,000,000  francs. 
France   (with    Belgium   and    Switzerland),    5 

and  10  francs,      .          .          .          .          .  600,000.000 

England,  half-sovereigns 450.000.000      " 

United  States,  pieces  of  1  and  2%  dollars,     .  250.000.000 

Total,  .          .          .       1,550,000,000      " 


310  THE  CONFERENCE  OF  1881 

Allowing  for  the  fact  that  a  portion  of  the  small  gold 
pieces  retired  would  be  replaced  by  gold  coins  of  larger  de- 
nomination, and  that  notes  representing  larger  amounts  might 
take  the  place  of  the  small  notes  withdrawn,  Levy  calculated 
that  the  plan  would  necessitate  a  new  currency  of  silver  coins 
to  the  extent  of  two  milliards  of  francs,  at  least,  and  he  thought 
that  this  might  not  only  stop  the  fall  of  the  price  of  silver, 
but  cause  a  progressive  rise  to  the  former  ratio.  To  meet 
the  objection  that  it  would  require  people  to  carry  about 
with  them  a  great  weight  of  silver  to  make  daily  transactions, 
he  suggested  that  silver  notes  should  be  issued,  secured  by  a 
corresponding  amount  of  the  metal.  The  result  would  be, 
therefore,  that  notes  redeemable  in  silver  would,  in  some  coun- 
tries, be  substituted  for  notes  redeemable  in  gold. 

One  feature  of  the  plan,  possibly  suggesting  the  reason  for 
the  lack  of  consideration  given  it  by  the  conference,  will  be 
readily  noticed.  Kearly  90  per  cent,  of  the  notes  to  be  with- 
drawn were  in  countries  then  on  a  paper  basis,  and  the  effect 
would  have  been  to  have  put  these  countries  on  a  silver  basis,  a 
step  which  they  had  deliberately  avoided  by  suspending  the 
coinage  of  silver  when  it  fell  below  the  value  of  their  depre- 
ciated notes.  Moreover,  France  would  have  been  compelled  to 
substitute  silver  or  silver  notes  for  nearly  600,000,000  francs  of 
small  gold  coins  when  her  currency  was  already  glutted  with 
silver. 

Among  the  letters  received,  in  response  to  the  resolution 
of  the  eighth  session  calling  for  expressions  of  opinion  from 
the  banks  of  issue,  was  one  from  the  officers  of  the  Bank  of  the 
ISTetherlands,  headed  by  Mees,  who  had  been  a  member  of 
the  conference  of  1867,  pointing  out  the  serious  difficulties  of 
the  situation,  and  declaring  their  opinion  that  the  establish- 
ment of  the  double  standard  over  a  greater  extent  of  territory 
would  be  the  only  efficacious  remedy.  The  Governor  of  the 
Bank  of  Belgium,  on  the  other  hand,  said  that  the  opinion  of 


MR.  THURMAN'S  OPINION  OF  THE  ALLEGED  CONCESSIONS          311 

the  council  of  that  institution  was  exactly  what  it  had  been  in 
1873  —  in  favor  of  the  single  standard  of  gold. 

The  adjournment  of  the  conference  to  enable  the  dele- 
gates to  discover  what  new  features  there  were  in  the  situation 
did  not  entirely  remove  the  uncertainty  as  to  the  plans  of  the 
British  and  German  governments.  The  latter  was  waiting  to 
see  what  the  former  might  propose,  and  both  were  coyly  wait- 
ing to  discover  how  far  the  advocates  of  bimetallism  might  go. 
At  the  tenth  session,  on  July  2,  it  became  sufficiently  clear  that 
each  side  had  waited  for  the  other.  Seismit-Doda,  of  Italy,  ad- 
vocated the  abandonment  of  the  discussion  of  the  question- 
naire, so  that  a  systematic  effort  might  be  made  to  find  out  in 
what  way,  if  any,  the  declarations  of  the  various  governments 
made  at  the  earlier  sessions  had  been  supplemented.  It  was 
finally  agreed  that  whatever  discussion  took  place  on  the  ques- 
tionnaire should  be  confined  to  the  last  two  questions  —  the 
measures  to  be  taken  to  reduce  the  oscillations  of  the  two 
metals  and  to  establish  a  fixed  ratio  between  them.  Ex-Sena- 
tor Thurman  took  the  floor,  and  quickly  turned  his  attention 
to  the  German  and  Indian  proposals.  He  said  that,  while 
the  American  people  believed  that  the  existing  monetary  sys- 
tems of  the  world  greatly  needed  reformation,  and  that  one  of 
the  most  effective,  if  not  the  most  effective,  reform  that  could 
be  made  would  be  the  adoption  of  bimetallism,  yet  they  were 
too  well  informed  not  to  know  how  slow  was  the  progress  that 
truth  often  made,  and  that  it  was  seldom  the  part  of  wisdom  to 
reject  what  was  attainable  and  reasonable  at  the  time  because 
it  fell  short  of  something  better  and  more  desirable.  He 
thought,  therefore,  that,  in  view  of  the  conflicting  opinions  of 
states  and  statesmen,  his  government  would  not  probably  feel 
it  to  be  its  duty  to  reject  any  and  every  proposition  that  came 
short  of  perfect  bimetallism.  It  could  afford  to  march  step 
by  step  instead  of  insisting  on  reaching  the  goal  at  a  single 
bound. 


312  THE  CONFERENCE  OF  1881 

"  But,  if  we  be  invited  to  halt  at  a  half-way  house  and  tarry  in  it 
for  a  season,  we  must,  before  we  accept  the  invitation,  be  well  as- 
sured that  the  tenement  is  not  a  dangerous  one  for  us  to  occupy. 
Now  here,  as  it  seems  to  me,  lies  the  chief  obstacle  to  the  accept- 
ance of  the  propositions  in  question.  Each  of  the  propositions,  as  I 
understand  it,  requires  that  the  United  States  and  France,  and,  per- 
haps, the  chief  states  of  the  Latin  Union,  shall  open  their  mints 
and  keep  them  open  for  the  free  and  unlimited  coinage  of  silver  into 
money  having  full  legal-tender  qiiality.  It  is  not  for  me  to  say  what 
France,  or  the  states  of  the  Latin  Union,  or  other  states  of  Europe 
here  represented  may  think  of  such  propositions.  Their  delegates 
will  answer  for  themselves,  if  they  see  fit  to  do  so  —  I  can  speak  in 
reference  to  my  own  government  alone.  Would  such  an  agreement 
as  that  proposed  be  acceptable  to  the  United  States?  I  am  bound, 
speaking  frankly,  to  say  that  I  think  it  would  not.  There  is  a  great 
and  vital  difference  between  a  grand  bimetallic  union  that,  by  fixing 
and  maintaining  a  stable  relation  between  gold  and  silver,  would 
stop,  or  at  least  powerfully  tend  to  stop,  the  efforts  so  often  made 
to  drain  a  state  at  one  time  of  one  of  the  metals  and  at  another  time 
of  the  other,  and  a  little  and  half-way  union  that  might  leave  each 
state  liable  to  a  recurrence  of  such  drains.  Now,  if  I  understand 
the  views  of  my  government  and  of  the  American  people,  they  do 
not  desire  an  alternative  standard,  gold  to-day  and  silver  to-morrow, 
nor  a  single  standard,  whether  of  gold  or  silver,  and  certainly  not 
the  single  silver  standard.  Their  stock  of  silver  money  is  less  in 
proportion  to  the  wealth  and  population  of  the  country  than  that  of 
most  commercial  nations,  while,  on  the  other  hand,  their  stock  of 
gold  is  very  large,  is  steadily  increasing  day  by  day,  and  is  likely, 
unless  prevented  by  some  blunder,  to  continue  to  increase.  Under 
such  circumstances,  it  is  but  natural  that  the  government  should 
hesitate  to  enter  into  an  agreement  the  effect  of  which  might  possibly 
be  to  lessen  the  amount  of  our  gold.  It  would  cheerfully  become 
a  party  to  a  great  bimetallic  union  which,  if  formed,  would,  of 
course,  open  to  its  mints  to  the  free  coinage  of  silver  ;  but  I  must  be 
permitted  to  doubt  whether,  without  such  a  union  in  existence,  it 
will,  by  convention,  surrender  its  power  over  its  own  coinage. 

"  In  saying  this  I  would  not  be  understood  as  underrating  the 
importance  of  the  German  and  English  propositions.  I  consider 
them  as  steps  in  the  right  direction,  and  entitled  to  the  most  re- 
spectful consideration;  but,  in  my  judgment,  they  fall  far  short  of 
what  the  exigency  requires,  and  I  see  no  probability  of  their  accept- 
ance." 

This  statement,  which  had  been  carefully  prepared,  evi- 
dently represented  the  position  of  the  entire  delegation  from 
this  country.  Its  character  may  have  been  somewhat  mod- 
ified by  a  desire  to  draw  further  concessions  from  the  German 
and  English  delegates,  for  there  was  a  strong  suspicion  that 
they  were  holding  something  back.  Nevertheless,  it  was  in 
the  main  a  true  statement  of  the  position  of  the  United  States 
government,  which  looked  upon  bimetallism  without  the  co- 


CERNUSCHI  RESENTS  A  GERMAN  INTIMATION  813 

operation  of  all  the  commercial  nations  as  impracticable.  It 
was  the  persistency  of  the  silver  advocates  in  Congress  that 
gave  the  Europeans  a  different  idea  and  sustained  them  in 
their  attitude  of  reserve. 

Thurman  was  followed  by  Schraut,  of  Germany,  who  re- 
hearsed the  serious  features  of  the  scarcity  of  gold,  and  then, 
apparently  for  the  purpose  of  relieving  Germany  of  any  moral 
responsibility  for  the  fall  of  silver,  and  of  intimating  that  other 
powers  should  bear  the  brunt  of  its  rehabilitation,  argued  that 
the  suspension  of  the  coinage  by  the  Latin  Union  had  been 
the  chief  cause.  To  be  sure,  he  said,  that  suspension  was 
brought  about  by  the  sales  of  silver  attempted  by  Germany 
but  a  sensible  and  persistent  depreciation  of  the  white  metal,  he 
held,  would  have  remained  impossible  as  long  as  the  Latin 
Union  really  accepted  it  at  a  fixed  price  for  coinage.  The 
union  acted  as  a  regulator,  and,  when  that  was  destroyed,  there 
was  nothing  to  prevent  its  fluctuations  and  decline.  This 
aroused  the  warm  nature  of  Cernuschi,  who  had  apparently 
made  up  his  mind  that  Germany  had,  from  the  beginning, 
been  endeavoring  to  entrap  the  conference  with  its  proposi- 
tions. He  said  that  nobody  could  be  mistaken  as  to  the  feel- 
ings animating  him,  when,  after  acknowledging  the  loss  sus- 
tained by  the  German  empire  from  the  demonetization  of  its 
silver  coin,  and  after  having  proposed  to  reimburse  her  for  that 
loss,  he  protested  against  the  accusation  thrown  out  against, 
the  Latin  Union  by  the  German  delegate.  If  Germany  had 
not  endeavored  to  appropriate  tho  legal  monometallism  of 
England,  Erance  would  have  continued  to  coin  the  two  metals 
freely.  Soetbeer,  he  said,  had  always  desired  to  cast  upon 
France  the  responsibility  for  the  monetary  disorder,  but  it 
was  Germany  who  made  the  beginning.  Germany  had  sup- 
posed that  she  could  become  monometallic  by  pouring  all 
her  silver  into  France  and  draining  her  of  gold  at  15.50  to  1; 
and,  in  doing  this,  prevent  a  loss  to  the  imperial  treasury. 


314  THE  CONFERENCE  OF  1881 

"  There  is  a  desire,"  he  added,  with  considerable  animation, 
"  to  resume  this  plan,  and  this  is  the  object  of  these  pretended 
concessions,  which  consist  in  reducing  the  exportation  of  Ger- 
man silver,  but  in  exporting  it  gradually  into  the  countries  of 
the  Latin  Union  and  in  taking  gold  for  it  at  15.50  to  1.  Even 
the  proposed  recoinage  of  her  silver  pieces  into  smaller  pieces 
at  the  15.50  rate  would  lead  to  this  final  result."  Cernuschi 
intimated  that  such  a  purpose  lay  underneath  the  proposition, 
and  that  France  would  not  regard  it  as  a  concession. 

The  point  was  not  debated  further,  but  Baron  von  Thiel- 
mann,  who  evidently  interpreted  the  unfavorable  expressions 
from  the  French  and  American  delegates  as  a  diplomatic  sally, 
arose  and  said  that  he  had  received  the  impression  that  a  fresh 
declaration  was  expected  from  him,  but  he  had  nothing  to  add 
to  what  he  had  stated  at  the  first  meeting.  Sir  Charles  Fre- 
mantle,  however,  then  presented  a  letter  written  two  weeks 
before  by  Sir  Alexander  Gait,  the  Canadian  delegate  who  had 
not  returned  to  the  conference,  to  the  effect  that,  if  the 
United  States  adopted  bimetallic  legislation  in  accord  with 
Europe,  it  would  be  the  interest  and  policy  of  Canada  to  fol- 
low the  same  course.  He  also  announced  that  he  had  just  re- 
ceived instructions  which  would  enable  him  to  make  a  com- 
munication to  the  conference  at  the  next  session.  The  English 
delegates  were  obviously  disturbed  over  the  declining  pros- 
pects of  an  agreement,  to  which  it  would  not  become  a  party. 

Dumas  opened  the  eleventh  session,  on  July  4,  with  an  able 
address  upon  the  historical  relations  of  gold  and  silver,  and 
their  natural  places  in  the  currency,  but  without  any  refer- 
ence to  any  propositions  short  of  bimetallism  except  in  ad- 
vising that,  if  steps  in  that  direction  were  taken,  the  smaller 
gold  coins  should  be  withdrawn  from  circulation ;  "  silver 
should  be  the  coin  of  the  population  which  labors  and  produces, 
a  population,"  he  said,  "  for  which  gold  is  so  often  a  chimera, 
and  silver  the  daily  bread  and  the  safeguard  of  the  morrow." 


GERMANY  USES  FURTHER  ARGUMENT  815 

Schraut,  the  German  delegate,  again  spoke  for  the  apparent 
purpose,  this  time,  of  encouraging  the  idea  advanced  by  Dumas 
of  giving  silver  a  greater  place  in  the  small  coinage.  Coming 
from  a  German  delegate,  the  statement  was  rather  significant. 
He  said : 

"  I  do  not  dispute  that  the  re-establishment  of  the  free  coinage 
of  gold  and  silver  at  a  fixed  raiio,  in  a  certain  group  of  states, 
would  raise  the  price  of  silver  to  the  rate  corresponding  to  that  ratio, 
and  that  its  future  oscillations  would  be  but  insignificant.  Acci- 
dental perturbations  would  be  the  less  to  be  feared  if  we  suc- 
ceeded in  guaranteeing  the  mints  against  an  unforeseen  and  extraor- 
dinary influx  of  the  white  metal.  The  best  means,  in  my  opinion, 
of  arriving  at  this  object  would  be  to  make  the  use  of  silver  general 
in  all  countries,  as  remarked  by  several  of  our  honorable  colleagues 
in  the  course  of  our  first  sessions. 

"  The  first  step  would  be  taken  in  this  path,  if  all  the  states 
which  have  issued  paper  money  notes  below  20  francs  would  call 
them  in  and  replace  them  by  silver  money.  I  reckon  among  these 
states  not  only  the  states  with  forced  currency  paper  money,  but 
also  the  United  States  of  America,  which  have  issued  a  considerable 
quantity  of  one  and  two  dollar  notes.  It  would  also  be  expedient, 
as  our  illustrious  colleague,  M.  Dumas,  has  shown,  to  do  away  with 
the  small  gold  coins,  and  to  replace  them  by  silver,  the  consumption 
of  which  would  be  augmented  in  direct  proportion  to  the  withdrawal 
of  small  notes  and  of  small  gold  coins." 

Following  this  evident  effort  to  draw  France  and  the 
United  States  into  an  agreement,  Sir  Charles  Fremantle  an- 
nounced that  he  wyould  defer  till  the  nest  session  the  communi- 
cation he  had  expected  to  be  able  to  make  at  this  meeting. 

In  submitting  some  statistics  of  France  as  to  the  quantity 
of  the  precious  metals  used  in  the  arts,  in  response  to  questions 
propounded  by  Lardy,  of  Switzerland,  earlier  in  the  confer^ 
ence,  Cernuschi  said  he  would  not  omit  calling  attention  to  the 
strange  position  of  the  partisans  of  gold,  who,  perplexed  and 
uneasy,  were  forced  to  institute  inquiries  to  ascertain  whether 
there  was  not  too  great  a  consumption  for  industrial  purposes 
of  the  metal  on  which  they  made  their  whole  economic  life 
depend.  Bimetallism,  he  said,  had  none  of  these  perplexities 
and  troubles.  He  also  took  occasion  to  say  that  all  the  meas- 
ures which  had  been  commended  as  half-measures  could  serve 
for  nothing.  The  session  closed  with  a  declaration  from  the 


816  THE  CONFERENCE  OF  1881 

Netherlands  delegate,  submitted,  Pierson  said,  in  obedience  to 
instructions  from  his  government,  which  considered  it  advan- 
tageous that  the  different  governments  should  be  enlightened 
as  to  their  intentions.  It  was  as  follows : 

"  The  government  of  the  Netherlands  is  of  opinion,  like  several 
members  of  this  conference,  that  the  fall  of  silver  and  its  great 
oscillations  of  value  are  a  great  evil. 

"  It  also  thinks  that  the  simultaneous  and  unreserved  adoption 
of  the  double  standard  by  all  the  great  states  of  Europe  and  America 
would  be  the  true  means  of  remedying  that  evil. 

"  It  would  scarcely  hesitate,  therefore,  to  propose  to  the  States- 
General  the  re-establishment  of  the  unlimited  coinage  of  silver,  at 
present  prohibited,  both  for  our  country  and  for  all  its  colonies,  as 
soon  as  the  double-standard  system  should  have  been  adopted  over 
an  area  as  vast  as  that  which  we  have  just  indicated. 

"  But  our  government  would  not  engage  to  act  thus  if  that  sys- 
tem be  established  only  over  a  more  restricted  area.  As  long  as  it  is 
ignorant  what  guarantees  would  be  given  for  fixing,  as  far  as 
possible,  the  ratio  of  value  between  the  two  metals,  what  states 
would  adopt  the  bimetallic  system,  and  what  concessions  Avould  be 
made  by  the  other  states  for  facilitating  its  success,  it  is  impossible 
to  judge  of  the  advantages  and  inconveniences  there  would  be  for 
the  Netherlands  and  its  colonies  in  re-establishing  the  unlimited 
coinage  of  silver,  even  maintaining  the  legal  ratio  between  that 
metal  and  gold,  which  is  now  not  15%,  but  15%. 

"  While,  however,  reserving  its  entire  liberty,  the  government 
of  the  Netherlands  does  not  peremptorily  reject  any  project  of  estab- 
lishing the  double-standard  system  in  an  area  comprising  only 
several  great  states  of  Europe  and  America.  Such  a  project,  if  pro- 
posed at  the  conference,  would  doubtless  be  taken  into  very  serious 
consideration  by  the  Netherlands." 

At  the  opening  of  the  twelfth  session,  Seismit-Doda  said, 
on  behalf  of  Italy,  that  it  had  hoped  for  decisive  resolutions 
from  the  suspension  of  the  conference,  and  it  was  prepared  to 
enter  upon  the  path  of  free  and  unlimited  coinage  of  silver, 
provided  Germany  and  England  would  also  enter  upon  it  un- 
reservedly. But  that  now  seemed  to  be  doubtful,  and  he  could 
only  make  known  what  his  government  would  do.  He  wished 
to  do  so  before  the  English  delegate  read  his  promised  commu- 
nication, so  as  to  show,  he  said,  that  his  government's  offer 
was  entirely  independent  of  what  the  English  delegate  might 
declare.  He  then  stated  that  the  Italian  government  would  be 
disposed  to  enter  into  a  league  of  various  states,  to  agree  upon 
the  limited  coinage  of  silver,  on  the  condition  that  the  Ger- 


CONCESSION  OP  THE  BANK  OP  ENGLAND  817 

man  government  would  engage  to  suspend  the  sale  of  its  silver 
for  at  least  five  years,  and  to  replace  the  gold  5-mark  pieces 
and  its  imperial  treasury  notes  by  silver  money,  and  also  admit 
for  silver  coins  the  ratio  of  15.50  to  1,  conferring  on  all  the 
silver  thus  coined  the  full  paying  power  possessed  by  the  old 
thalers;  and  on  the  further  condition  that  England  would 
enter  into  an  engagement  with  the  other  states  to  increase  the 
paying  p_ower  of  its  silver  crowns.  If  these  conditions  were  ac- 
cepted by  Germany  and  England,  Italy  might  agree  with 
the  other  states  of  the  Latin  Union  and  with  the  United 
States  in  resuming  the  limited  coinage  of  silver  for  a  term 
not  to  exceed  that  fixed  for  the  suspension  of  sales  by  Ger- 
many. The  quota  of  silver  coinage  for  each  state,  according 
to  Italy's  plan,  should  be  based  on  the  population. 

The  British  delegate  then  read  the  following  declaration: 

"  In  pursuance  of  the  announcement  made  to  the  conference  at 
last  Saturday's  session,  I  have  the  honor  of  making  the  following 
communication  on  behalf  of  my  government: 

"  The  United  States  Minister  at  London,  after  a  conversation 
with  Her  Majesty's  Secretary  of  State  for  Foreign  Affairs,  having 
expressed  an  opinion  that  it  would  be  possible  to  arrive  at  an  agree- 
ment between  the  other  powers  on  the  monetary  question,  if  (inter 
alia)  the  Bank  of  England  should  agree  to  exercise  the  option  al- 
lowed it  by  the  Bank  Charter  Act  of  1844  (7  and  8  Viet,  c.  32,  ss.  2  and 
3),  and  if  the  Treasury  would  put  a  question  to  that  effect  to  the 
bank  directors,  Lord  Granville  applied  to  that  department,  and 
through  that  medium  obtained  a  reply  from  the  bank  directors. 

"  In  this  reply  the  bank  declares  its  readiness  to  exercise  the 
above-mentioned  option,  on  condition  of  the  mints  of  other  nations 
reverting  to  the  observance  of  rules  insuring  the  exchange  of  gold 
for  silver  and  of  silver  for  gold  at  a  legal  rate. 

"  Her  Majesty's  government,  having  subseqiiently  learned  that 
Mr.  Lowell's  action  was  in  no  way  the  result  of  instructions  from 
his  government,  did  not  deem  it  proper  to  follow  up  the  declaration 
of  the  Bank  of  England  by  communicating  it  to  the  conference 
through  its  delegate.  A  similar  proposal  having,  however,  within 
the  last  few  days,  been  submitted  by  His  Majesty's,  the  King  of 
Italy's,  Ambassador  at  London,  on  behalf  of  his  government,  Her 
Britannic  Majesty's  government  has  promptly  given  it  the  respect- 
ful reception  it  will  always  accord  to  the  representative  of  one  of 
the  great  powers  of  Europe. 

"  I  have,  therefore,  the  honor  of  laying  on  the  table  of  the  con- 
ference the  very  words  used  by  the  Bank  of  England  in  the  above- 
mentioned  comnmnication: 

" '  The  Bank  Charter  Act  permits  the  issue  of  notes  upon  silver, 


318  THE  CONFERENCE  OF  1881 

but  limits  that  issue  to  one-fourth  of  the  gold  held  by  the  bank  in 
the  issue  department.  The  purchase  of  gold  bullion  is  obligatory 
and  unlimited,  the  purchase  of  silver  bullion  is  discretional  and 
limited,  the  distinction  being  enforced  by  the  necessity  of  paying  all 
notes  in  gold  on  demand.  The  reappearance  of  silver  bullion  as  an 
asset  in  the  issue  department  of  the  Bank  of  England  would,  as  is 
understood  by  the  Foreign  Office  letter,  depend  entirely  on  the  re- 
turn of  the  mints  of  other  countries  to  such  rules  as  would  insure 
the  certainty  of  conversion  of  gold  into  silver  and  silver  into  gold. 
The  rules  need  not  be  identical  with  those  formerly  in  force;  the 
ratio  between  silver  and  gold  and  the  charge  for  mintage  may  both 
or  either  of  them  be  varied  and  yet  leave  unimpaired  the  facility 
of  exchange,  which  would  be  indispensable  to  the  resumption  of 
silver  purchases  by  a  bank  of  issue,  whose  responsibilities  are  con- 
tracted in  gold.  Subject  to  these  considerations,  the  Bank  Court  are 
satisfied  that  the  issue  of  their  notes  against  silver  within  the  letter 
of  the  act  would  not  involve  the  risk  of  infringing  that  principle 
of  it  which  imposes  a  positive  obligation  on  the  bank  to  receive  gold 
in  exchange  for  notes  and  to  pay  notes  in  gold  on  demand.  The 
Bank  Court  see  no  reason  why  an  assurance  should  not  be  conveyed 
to  the  monetary  conference  at  Paris,  if  their  Lordships  think  it  de- 
sirable, that  the  Bank  of  England,  agreeably  with  the  act  of  1844, 
would  be  always  open  to  the  purchase  of  silver  under  the  conditions 
above  described.' " 

This,  apparently,  was  the  "  inducement "  which  England 
had  been  holding  back  in  the  hope  that  Germany's  concessions 
would  satisfy  the  United  States  and  France.  Taken  with  the 
statement  of  the  Italian  delegate,  it  introduced  a  new  phase 
of  the  question,  and  the  members  were  in  some  doubt  as  to  its 
precise  effect  or  bearing.  Pierson,  of  the  Netherlands,  called 
attention  to  the  inevitable  reservations  in  all  the  propositions, 
and  asked  why  it  was  that  the  Bank  of  England  was  not  dis- 
posed to  buy  silver  ingots  without  stipulating  the  formation 
of  a  bimetallic  league.  He  admitted  that  the  question  was 
nai've.  How  could  they  expect  the  bank  to  buy  a  metal 
treated  throughout  Europe  as  proscribed,  as  a  pariah?  For 
that  metal  to  enter,  in  the  regular  way,  into  the  metallic  stock 
of  the  bank,  its  value  must  be  steady;  "but  observe,"  said 
Pierson,  "  how  important  the  declaration  is  from  the  theoreti- 
cal standpoint.  The  great  question  which  divides  us  is  this: 
'  "Will  the  adoption  of  the  double  standard  by  a  large  number 
of  states  have  the  effect  of  rendering  the  price  of  silver  stable 
as  expressed  in  gold  ? '  We  say, '  Yes  ' ;  our  opponents  say, l  No, 


ENGLAND'S  ILLOGICAL  POSITION  319 

the  effect  of  a  bimetallic  league  will  never  be  such;  your  prin- 
ciple is  unsound;  you  are  going  against  the  nature  of  things; 
the  ratio  of  the  value  between  gold  and  silver  is  regulated  by 
causes  with  which  law  has  scarcely  anything  to  do.'  Now, 
here  is  the  British  government  coining  and  placing  itself  on  our 
side,  inasmuch  as  it  approves  of  the  bank  taking  a  measure 
which,  I  say  this  on  the  strength  of  experience  gained  in  a 
practical  career,  would  be  the  greatest  absurdity,  would  be 
most  prejudicial  to  the  bank's  own  shareholders,  unless  the 
adoption  of  the  double  standard  had  the  effect  of  making  the 
price  of  silver  stable."  This  was  turning  the  table  very 
cleverly  upon  the  monometallists,  for,  as  Pierson  pointed  out, 
the  proposal  even  went  further,  from  this  theoretical  view,  than 
did  the  leading  bimetallists,  who  refused  to  admit  that  a  bi- 
metallic league  would  have  the  desired  effect  on  the  value  of 
silver  unless  the  league  was  a  general  one  and  included  Eng- 
land ;  but  in  their  anxiety  to  have  France  and  the  United  States 
form  a  bimetallic  union  both  England  and  Germany  had  ad- 
mitted, through  their  delegates,  that,  in  their  opinion,  such  a 
union  would  make  the  price  of  silver  stable.  Pierson  followed 
up  to  his  advantage  in  this  way : 

"  This,  then,  is  what  I  would  say  to  England:  You  are  friendly, 
but  you  are  not  logical.  If  you  really  believe  that  the  double-stand- 
ard system  can  make  the  price  of  silver  stable,  why  do  you  refuse  us 
your  co-operation?  If  you  accord  it,  the  present  situation  would 
immediately  change  from  top  to  bottom.  The  Netherlands,  as  is 
seen  by  the  declaration  I  have  made,  would  scarcely  hesitate  to 
adopt  bimetallism.  France,  the  United  States,  and  Italy  would  be 
quite  disposed  to  do  the  same  ;  in  short,  a  union  would  very  soon 
be  formed,  comprising  the  most  important  commercial  countries, 
and  I  cannot  believe  that  Germany  would  refuse  to  form  part  of  it. 
You  have  but  to  utter  a  word  and  the  thing  is  done.  Others  are 
hesitating  only  because  they  are  afraid  of  failing  without  you. 
Look,  moreover,  at  the  probable,  or,  at  least,  possible,  effects  of  your 
refusal.  The  limping  standard  countries  cannot  permanently 
maintain  that  system  which  is  contrary  to  the  simplest,  the  most 
elementary  rule,  viz.:  that  the  legal  value  of  money  should  not  be 
above  its  value  as  metal.  The  United  States  will  not  go  on  coining 
silver;  they  will  adopt  the  single  gold  standard.  Italy  will  do  the 
same,  as,  also,  Austria,  as  soon  as  she  emerges  from  forced  currency. 
Do  you  realize  what  all  this  means?  It  means  fall  of  silver,  your 


320  THE  CONFERENCE  OF  1881 

Indian  money,  and  rise  of  gold,  your  home  money.  It  means  entire 
derangement  of  prices,  monetary  confusion,  commercial  chaos.  We 
are  told,  in  the  end,  order  will  be  re-established.  Indeed,  order 
always  ends  by  being  re-established,  but  is  this  a  reason  for  not  fear- 
ing revolutions?  ....  The  situation  is  serious.  On  you  depends 
whether  the  evil  assumes  enormous  proportions  or  is  entirely  re- 
moved." 

The  French  and  American  delegates,  after  a  full  examina- 
tion of  the  situation,  decided  that  nothing  could  result  till  the 
stress  of  circumstances  had  become  more  severe  in  Great  Brit- 
ain and  Germany.  That  this  increased  stress  would  come  they 
had  no  doubt,  and  they  calmly  expected  that  after  a  while  the 
stubborn  powers  would  yield,  like  Pharaoh  after  a  few  more 
plagues.  The  conference  met  for  its  thirteenth  session  on 
July  8,  therefore,  having  been  given  to  understand  that  the 
time  had  come  to  consider  an  adjournment,  and  ex-Secretary 
Evarts,  on  behalf  of  the  delegates  of  France  and  the  United 
States,  read  the  following  declaration : 

"  1.  The  depreciation  and  great  fluctuations  in  the  value  of 
silver  relatively  to  gold,  which  of  late  years  have  shown  themselves 
and  which  continue  to  exist,  have  been  and  are  injurious  to  com- 
merce and  to  the  general  prosperity,  and  the  establishment  and 
maintenance  of  a  fixed  relation  of  value  between  silver  and  gold 
would  produce  most  important  benefits  to  the  commerce  of  the  world. 

"  2.  A  convention,  entered  into  by  an  important  group  of  states, 
by  which  they  should  agree  to  open  their  mints  to  free  and  unlimited 
coinage  of  both  gold  and  silver,  at  a  fixed  proportion  of  weight  be- 
tween the  gold  and  silver  contained  in  the  monetary  unit  of  each 
metal,  and  with  full  legal-tender  faculty  to  the  money  thus  issued, 
would  cause  and  maintain  a  stability  in  the  relative  value  of  the 
two  metals  suitable  to  the  interests  and  requirements  of  the  com- 
merce of  the  world. 

"  3.  Any  ratio,  now  or  of  late  in  use  by  any  commercial  nation, 
if  adopted  by  such  important  group  of  states,  could  be  maintained; 
but  the  adoption  of  the  ratio  of  15.50  to  1  would  accomplish  the 
principal  object  with  less  disturbance  in  the  monetary  systems  to  be 
affected  by  it  than  any  other  ratio. 

"4.  Without  considering  the  effect  which  might  be  produced 
towards  the  desired  object  by  a  lesser  combination  of  states,  a  con- 
vention which  should  include  England,  France,  Germany,  and  the 
United  States,  with  the  concurrence  of  other  states,  both  in  Europe 
and  on  the  American  continent,  which  this  combination  would  as- 
sure, would  be  adequate  to  produce  and  maintain  throughout  the 
commercial  world  the  relation  between  the  two  metals  that  such 
convention  should  adopt." 

President  Magnin  then  informed  the  conference  that  a 


PROROGATION  OP  THE  CONFERENCE  321 

considerable  number  of  delegates  of  the  invited  powers  had 
expressed  a  desire  in  private  conversation  to  have  the  con- 
ference suspend  its  labors  again  and  adjourn  to  some  later 
date.  If  the  idea  should  be  favorably  entertained,  the  delega- 
tions of  France  and  the  United  States  would  submit  resolutions 
to  that  effect.  The  delegate  from  Sweden  at  once  objected  on 
the  ground  that  it  would  exceed  diplomatic  decorum  to  give  so 
much  permanence  to  the  meetings  without  consulting  the  re- 
spective governments,  and  that  it  would  do  no  good.  The 
proposed  prorogation  would,  in  his  opinion,  signify  nothing, 
unless  a  hope  of  inducing  the  United  States  to  change  its  mind 
as  to  bipartite  bimetallism,  or  the  German  and  English  govern- 
ments to  change  their  minds  as  to  universal  bimetallism;  he 
considered  that  it  would  be  better  to  at  once  acknowledge  that 
the  project  of  bimetallism,  failing  the  adhesion  of  certain 
states,  had  collapsed,  and  that  the  conference  could  only  fol- 
low the  example  of  that  of  1878,  and  declare  the  necessity 
of  maintaining  the  monetary  function  of  silver  as  of  gold. 

Baron  von  Thielmann  desired  the  submission  of  a  resolution 
of  prorogation,  so  that  its  grounds  might  be  more  intelligently 
discussed,  and  after  a  twenty  minutes'  intermission  the  French 
and  American  delegations  submitted  resolutions  to  the  effect 
that,  considering  the  declarations  made  in  the  name  of  several 
states,  all  admitting  the  expediency  of  taking  various  meas- 
ures in  concert,  there  was  ground  for  believing  that  an  un- 
derstanding might  be  established  between  the  states,  but  that 
it  was  expedient  to  suspend  the  meetings,  for  the  situation 
as  to  some  states  might  call  for  the  intervention  of  government 
action,  thus  affording  a  reason  for  giving  the  opportunity  for 
diplomatic  negotiations.  It  was,  therefore,  proposed  to  ad- 
journ to  April  12,  1882.  The  resolution  was  supported  by 
the  Governor  of  the  Bank  of  France,  who  said  that  both  the 
delegates  of  his  country  and  the  United  States  concurred  in 

recommending  it.     The  Belgian  delegate  announced  that  he 
21 


322  THE  CONFERENCE  OF  1881 

should  support  the  proposition  because  it  offered  advantages, 
and  would  involve  no  inconvenience,  and  Lord  Reay,  the  Ind- 
ian delegate,  doubtless  expressed  the  opinion  of  the  English 
government  when  he  said  that  there  had  been  many  proofs  of 
the  desire  of  the  different  governments  to  arrive  at  an  interna- 
tional modus  Vivendi  without  cherishing  the  hope  of  carrying 
out  a  universal  system,  and  that  it  was  allowable  to  expect 
that  Austria  and  Russia  would  offer  their  powerful  co-opera- 
tion for  the  rehabilitation  of  silver.  He  hoped  that  the  French 
and  American  governments  would  be  able  at  the  adjourned 
conference  to  offer  a  programme,  giving  the  labors  a  practical 
direction,  and  lie  considered  it  especially  desirable  that  the  pro- 
gramme should  be  kept  within  the  limits  imposed  by  the  action 
of  governments,  and  not  aim  at  the  adoption  of  an  absolute 
theory  not  previously  sanctioned  by  the  governments,  for  the 
theorists  who  voted  for  the  motion  of  adjournment  would 
practically  acknowledge  that  the  question  remaining  was  not 
the  application  of  an  economic  thesis,  but  the  discovery  of  a 
rapprochement  for  escaping  the  risks  of  a  terrible  crisis.  The 
delegates  of  Austria  and  of  Norway  also  supported  the  motion, 
and  it  was  unanimously  adopted.  After  the  exchange  of 
courtesies  the  conference  adjourned,  never  to  reassemble  for 
the  practical  purposes  it  had  in  view. 


CHAPTER  VII 

SILVER  COINAGE  IN  THE  UNITED  STATES  AND  PROTECTIVE  MEASURES  IN 
EUROPE  — THE  STRUGGLE  FOR  GOLD 

LITTLE  need  be  said  in  the  way  of  review  of  the  character  of 
the  conference.  The  disposition  of  the  delegations  of  the 
different  governments  has  been  revealed  in  the  brief  survey 
of  the  course  of  the  deliberations  in  the  last  chapter.  It  must 
always  be  remembered  that  the  participants  in  any  event  view 
its  features  from  a  different  standpoint,  and  in  a  different  at- 
mosphere and  light,  from  those  who  are  removed  by  space  and 
time.  We  can  now  observe  it  from  the  vantage-ground  of  an 
intervening-  experience,  and,  able  to  examine  -in  its  totality 
what  the  delegates  could  only  discern  in  its  growth,  we  can 
more  easily  note  the  character  of  motives  which  were  then  dis- 
guised and  not  wholly  discovered.  In  interest  and  importance 
the  conference  of  1881  surpasses  others  in  the  bimetallic  series. 
It  took  place  at  a  time  when  the  doctrine  of  international  bi- 
metallism had  apparently  reached  its  highest  practical  develop- 
ment. ]^ever  before  or  since  have  so  many  states  affirmed  its 
practicability,  or  has  there  been  such  a  general  desire  to  ac- 
complish something.  Though  speculations  may  be  idle,  it 
seems  safe  to  say  that  but  for  the  continuing  uncertainty  of 
what  France,  and  especially  the  United  States,  would  do  in 
default  of  an  immediate  agreement  with  other  states,  some- 
thing substantial  might  have  resulted.  If  the  delegates  of  the 
United  States  could  have  been  able  to  assert  that,  failing  in 
an  agreement  which  would  include  England  and  Germany, 
their  government  would  at  once  repeal  the  silver  coinage  act 
and  await  the  time  when  an  agreement  was  possible;  if  Aus- 


324  THE  STRUGGLE  FOR  GOLD 

tria  would  have  definitely  announced  that,  in  case  England  and 
Germany  adhered  to  the  gold  basis,  she  would,  thenceforth, 
take  steps  to  adopt  it;  if  Russia  had  been  ready  to  say  that  in 
a  few  years  it  would  proceed  to  amass  a  great  stock  of  gold, 
it  is  doubtful  if  England  and  Germany,  in  view  of  circum- 
stances then  existing,  would  have  dared  to  stand  in  the  way 
of  a  union  which  included  them.  They,  at  least,  would  not 
have  contented  themselves  with  playing  upon  the  bimetallic 
desires  of  France  and  the  United  States  with  inconsequential 
concessions. 

As  it  was,  they  were  too  seriously  concerned  to  uphold  a 
single  doctrine  of  the  old  gold  monometallism,  but  threw 
them  all  away  in  their  eagerness  to  show  that  bimetallism  was 
possible  and  practicable  with  only  France  and  the  United 
States  to  back  it.  They  practically  admitted  every  bimetallic 
argument.  They  were  even  more  pronounced  than  others  in 
their  portrayal  of  the  extreme  dangers  of  the  situation;  they 
freely  admitted  the  appreciation  in  the  value  of  gold,  the 
possibility  of  a  fixed  ratio  and  the  rehabilitation  of  silver. 
Even  if  the  Belgian  delegate  denied  this,  it  made  little  differ- 
ence when  the  English  and  German  delegates  frequently  em- 
braced opportunities  to  affirm  it.  Because  they  still  had 
hopes  that  a  bimetallic  agreement  with  the  United  States  and 
France  as  a  centre  would  eventuate,  they  held  off,  and  at  any 
time  during  the  next  six  years  a  bimetallic  agreement  includ- 
ing England  and  Germany  would  have  been  possible  and 
quite  probable  had  the  United  States  definitely  and  unre- 
servedly ceased  their  efforts  to  do  something  for  silver.  The 
attitude  of  expectancy  still  continued,  and  for  two  years  the 
price  of  silver  held  fairly  steady  at  about  52  pence. 

The  proper  position  for  the  United  States  to  take  in  behalf 
of  bimetallism  was  appreciated  by  the  administration  at  Wash- 
ington, but  was  scorned  by  the  radical  silver  advocates.  No 
doctrine  ever  stood  in  such  dire  need  of  being  delivered  from  its 


THE  CONFERENCE  FAILS  TO  REASSEMBLE  325 

most  officious  friends.  Supplementing  a  statement  concern- 
ing the  continued  difficulties  of  circulating  the  new  silver 
dollars,  Secretary  Folger  said  in  his  report  for  December, 
1881: 

"  The  silver  question  Is  involved  in  some  embarrassments.  The 
monetary  conference  to  which  a  commission  was  sent  the  past  year, 
after  elaborate  discussion,  reached  no  conclusion,  except  to  adjourn 
to  meet  again  for  a  further  discussion  next  April.  Whether  a  re- 
newal at  the  present  time  of  the  consideration  of  the  subject  by  it 
is  likely  to  lead  to  any  practical  or  acceptable  results  seems  doubt- 
ful. That  most  of  the  European  nations  have  a  deep  interest  in 
a  proper  adjustment  of  the  ratio  between  gold  and  silver  coinage, 
if  not  deeper  than  the  United  States,  admits  of  no  doubt.  We 
furnish  the  world  with  the  largest  portion  of  both  gold  and  silver, 
and  our  exports  command  the  best  money  of  the  world,  as  they  ever 
should  do  and  will,  unless  we  bind  ourselves  to  accept  of  a  poorer. 
We  neea  not  appear  anywhere  as  supplicants  when  we  clearly  may 
be  the  controllers The  most  potential  means  of  bring- 
ing about  any  concert  of  action  among  different  nations  would  ap- 
pear to  be  for  the  United  States  to  suspend  for  the  present  the  further 
coinage  of  silver  dollars.  This  is  the  decided  opinion  in  both  France 
and  America  of  the  highest  authorities  on  bimetallism  and  of  those 
who  wish  to  bring  silver  into  general  use  and  raise  its  value  ;  and 
it  is  believed  that  a  cessation  of  coinage  would  at  a  very  early 
day  bring  about  a  satisfactory  consideration  of  the  whole  subject 
among  the  chief  commercial  nations." 

This  was  also  the  opinion  of  the  American  delegates  to  the 
conference,  who  saw  reasons  for  thinking  that  England's  em- 
barrassments would  continue  and  multiply  till  the  govern- 
ment yielded.  The  bimetallists  in  Congress  should  have  had 
foresight  enough  to  have  adopted  the  suggestion  at  once,  or 
before  the  time  for  the  reassembling  of  the  conference.  But, 
instead,  it  allowed  the  silver  dollars  to  accumulate  and  relieve 
the  embarrassments  of  the  European  nations,  and,  owing  to 
a  persistent  clamor  from  the  South,  there  was  a  movement 
for  the  reduction  of  the  tariff  —  something  which  Europe 
always  awaited  hopefully.  AVhen  the  time  for  reassembling 
came  it  was  found  that  England  and  Germany  adhered  to 
their  positions,  and  France  and  the  United  States  were  quite 
as  unwilling  as  ever  to  accept  their  terms.  So  the  time  passed 
without  anything  being  undertaken. 

While  the  United  States  continued  to  pile  up  silver  dol- 


326  THE  STRUGGLE  FOR  GOLD 

lars  in  the  vaults  of  the  treasury,  the  European  governments 
took  rational  steps  to  protect  themselves.  In  September,  1882, 
the  Dutch  delegates  strongly  recommended  to  their  govern- 
ment the  conversion  into  bullion  and  the  sale  of  a  part  of  the 
silver  coin  held  by  the  Bank  of  Holland,  and  the  purchase  of 
gold  ingots  with  the  proceeds.  The  stock  of  gold  in  the  bank, 
which  at  the  close  of  the  year  1880  was  about  57,000,000 
florins,  had  fallen  to  nearly  11,000,000,  while  the  stock  of 
silver  had  varied  between  91  and  94  millions  of  florins.  The 
gold  depletion  was,  in  part,  due  to  the  unusual  efforts  of  the 
Banks  of  England,  France,  and  Germany  to  accumulate  gold, 
which  began  as  soon  as  it  became  apparent  that  no  settlement 
for  a  larger  use  of  silver  was  probable.  The  Dutch  delegates, 
looking  to  the  interests  of  the  country  in  its  commercial  rela- 
tions with  neighboring  states  in  which  gold  was  the  standard, 
and  to  the  necessity  of  maintaining  a  normal  rate  of  exchange, 
urged  that  a  stock  of  gold  must  always  be  kept  on  hand,  as, 
whenever  the  bank  should  become  unable  to  place  gold  bullion 
at  the  disposal  of  the  exporter,  gold  coins  would  command 
a  premium,  with  the  necessary  result  that  the  standard  silver 
coins  would  become  depreciated  and  the  rate  of  exchange 
with  London  would  rise  to  an  abnormal  height.  Some  objec- 
tion was  made  to  the  plan  because  the  sale  of  silver  and  the 
purchase  of  gold  could  not  be  effected  except  at  a  loss  of  about 
15  per  cent,  to  the  state,  but  in  February,  1883,  a  bill  was  in- 
troduced by  the  government  into  the  second  chamber  of  the 
States-General,  authorizing  the  Minister  of  Finance  to  cause 
2^-florin  pieces  of  the  nominal  value  of  25  millions  of  florins 
to  be  melted  and  sold.  In  order  to  meet  the  loss  entailed  by 
this  operation,  another  bill  was  at  the  same  time  presented,  fix- 
ing at  15  instead  of  10  millions  of  florins  the  amount  of  gov- 
ernment paper  money,  thus  increasing  by  5  millions  the  debt 
bearing  no  interest.  A  long  controversy  followed,  and  in  the 
meantime  the  situation  of  the  bank  greatly  improved,  so  that, 


TONS  OF  SILVER  DOLLARS  827 

when  the  measure  finally  passed,  the  government  did  not  con- 
sider it  necessary  to  avail  itself  of  its  provisions,  though  it  re- 
mained on  the  statute-books  conveniently  ready  for  such  an 
emergency.  The  government  took  a  more  cautious  and  less 
expensive  course,  by  melting  a  sufficient  number  of  the  2-J- 
florin  pieces,  whenever  silver  was  needed  for  subsidiary  pur- 
poses, instead  of  purchasing  ingots  in  the  London  market  as 
theretofore.  In  this  way  quite  a  large  amount  of  the  silver 
in  the  bank  was  worked  into  the  home  and  colonial  circula- 
tion as  limited  tender. 

In  striking  contrast  to  this  were  'the  efforts  of  our  Con- 
gress to  force  silver  into  the  circulation.  The  New  York 
Clearing-House  had  persistently  discriminated  against  the  sil- 
ver dollars  and  their  certificates,  and  in  July,  1882,  Congress 
passed  an  act  prohibiting  banking  associations  from  being 
members  of  any  clearing-house  in  which  silver  certificates 
were  not  receivable  for  balances.  The  associated  banks  passed 
resolutions  nominally  complying  with  the  act,  but  the  prac- 
tice was  such  that  the  Treasury  was  unable  to  use  either  the 
silver  dollars  or  certificates  in  settlements  at  the  Clearing- 
House.  This  operated  against  the  accumulation  of  gold  in  the 
Treasury,  and  resulted  in  a  constant  increase  in  the  accumula- 
tions of  silver.  The  Secretary  of  the  Treasury  remarked  in 
his  report  that  year,  that  if  the  coinage  of  silver  dollars  was 
kept  up,  and  the  demand  for  them  continued  as  dormant  as 
it  had  been  up  to  that  time,  it  would  become  a  serious  question 
where  to  find  storage  room  for  them  in  the  public  receptacles. 
In  all,  there  were  then  2400  tons  of  the  metal  stored  in  the 
public  vaults. 

The  remarkable  excess  of  imports  of  gold  over  exports 
ceased,  also,  at  about  this  time.  Whereas  the  excess  of  imports 
over  exports  was  $77,000,000  in  1880,  and  $97,000,000  in 
1881,  in  1882  it  was  only  $1,800,000,  and  in  1883  only 
$0,000,000.  This  was  largely  due  to  diminished  exports  of 


328  THE  STRUGGLE  FOR  GOLD 

grain,  European  harvests  having  improved  in  the  two  latter 
years;  but  the  restrictions  which  the  large  banks  of  Europe  put 
in  the  way  of  gold  for  export  had  much  to  do  with  it,  for  it 
operated  against  our  export  trade  in  the  products  of  our  manu- 
factories. At  the  same  time  the  European  governments  were 
taking  every  possible  step  to  increase  their  export  trade,  and 
some  of  them  to  decrease  their  imports.  Germany  imposed  a 
high  tariff  on  articles  that  came  into  competition  with  her 
own  products  or  were  not  essential  to  the  subsistence  of  her 
people.  In  1881  the  balance  of  our  trade  with  Germany  was 
$17,000,000  in  our  favor,  in  1882  it  was  $2,000,000  in  Ger- 
many's favor.1 

The  cessation  of  the  excess  of  gold  imports,  however,  was 
not  then  a  serious  matter  to  the  United  States,  which  had  a 
large  stock  of  gold,  and  produced  it  to  the  value  of  over  $30,- 
000,000  yearly.  There  was  nothing  to  be  concerned  about  so 
long  as  our  own  product  remained  here.  Xo  nation  ever  had 

i  "  While  the  exportations  to  the  United  States  were  so  large 
and  gratifying  to  the  people  of  Germany,  the  importations  from 
the  United  States  showed  a  decrease,  and  it  would  seem  that  in  al- 
most that  proportion  in  which  the  exportations  to  the  United  States 
increased,  the  importations  from  our  republic  decreased.  Yes.  even 
to  a  greater  degree,  for  although  during  the  fiscal  year  1881-82  the 
exportations  from  Germany  to  the  United  States  amounted  in  value 
to  about  $12,000,000  more  than  in  1880-81,  importations  from  the 
United  States  were  about  $10,000,000  less.  The  policy  of  the  govern- 
ment of  this  empire  in  placing  high  duties  upon  articles  grown  or 
produced  in  foreign  countries  has  had  the  effect,  in  my  judgment, 
to  seriously  impair  our  commercial  prospects  in  this  direction.  .  .  . 
Borne  down  by  military  burdens  and  the  legacy  of  the  past,  Europe 
looks  across  the  watery  waste  and  sighs  for  resources  like  ours  — 
for  such  a  destiny.  The  great  question  is  not  how  the  great  Amer- 
ican Republic  shall  dispose  of  its  surplus  products,  but  how  shall 
Europe  find  in  America  and  the  world  at  large  markets  for  its 
wares,  that  its  multitudes  may  obtain  bread  to  eat  and  be  withheld 
from  revolution.  They  need  from  us  these  staples  of  life,  but  how, 
in  return  for  these  staples,  shall  they  requite  us?"  — Report  of  .Tas. 
Henry  Smith,  Commercial  Agent  at  Hesse-Darmstadt,  Sept.  1,  1883. 

In  a  speech  in  the  Reichstag.  May  12,  1882,  Bismarck  said: 
"  Because  it  is  my  deliberate  judgment  that  the  prosperity  of 
America  is  mainly 'due  to  its  system  of  protective  laws,  I  urge  that 
Germany  has  now  reached  that  point  where  it  is  necessary  to  imitate 
the  tariff  system  of  the  United  States." 


WARNINGS  FROM  THE  TREASURY  329 

an  equal  opportunity  to  commercially  control  the  money  of 
the  world ;  no  nation  ever  so  wasted  its  opportunities  as  did  the 
United  States  then.  Our  currency  policy  would  have  ruined 
any  country  in  Europe  in  short  order,  and  it  was  not  long 
before  our  great  resources  began  to  show  its  effects.  A  change 
was  manifest  soon  after  the  slight  tariff  reduction  of  1883,  and 
yet  for  a  whole  decade  nothing  stood  between  us  and  a  crisis 
except  this  tariff.  When,  finally,  it  was  decided  to  throw 
that  down,  the  crisis  was  at  hand.  Regularly  every  year  a 
warning  came  from  the  Secretary  of  the  Treasury.  Hugh 
McCulloch,  who  again  became  the  head  of  the  department  for 
a  brief  period  under  President  Arthur,  said  in  his  report,  in 
December,  1884,  that  it  was  becoming  more  and  more  evident 
that  silver  certificates  were  taking  the  place  of  gold,  and  that 
a  panic  or  an  adverse  current  of  exchange  might  compel  the 
use  in  ordinary  payments  by  the  Treasury  of  the  gold  held  for 
the  redemption  of  the  United  States  notes,  or  the  use  of  silver 
or  silver  certificates  in  the  payment  of  its  gold  obligations. 
"  The  United  States,"  he  said,  "  is  one  of  the  most  powerful 
of  nations  —  its  credit  is  high,  its  resources  limitless;  but  it 
cannot  prevent  a  depreciation  of  silver  unless  its  efforts  are 

aided  by  leading  nations  in  Europe The  European 

nations  which  hold  large  amounts  of  silver  must  sooner  or  later 
come  to  its  rescue,  and  the  suspension  of  coinage  in  the  United 
States  would  do  much  to  bring  about  on  their  part  action  in 
its  favor.  But  whatever  might  be  the  effect  of  the  suspension 
of  the  coinage  upon  the  commercial  value  of  silver,  it  is  very 
clear  that  the  coinage  cannot  be  continued  without  detriment 
to  general  business  and  danger  to  the  national  credit."  But 
Congress,  observing  the  unquestioning  faith  with  which  the 
people  took  the  silver  certificates  at  the  gold  value,  considered 
the  warnings  idle  and  remained  oblivious  to  the  dangers  un- 
derneath the  surface  of  things.  Bad  financial  tendencies  sel- 
dom manifest  themselves  clearly  when  confidence  is  com- 


330  THE  STRUGGLE  FOR  GOLD 

plete ;  the  condition  of  affairs  may  seem  to  warrant  the  greatest 
satisfaction  and  yet  be  on  the  point  of  disaster,  precipitated, 
perhaps,  by  a  trifle. 

The  depression  of  trade  continued  in  England,  and  the 
number  of  those  who  attributed  it  to  the  scarcity  of  gold  and 
the  fall  in  prices  increased  after  the  adjournment  of  the  con- 
ference. None  did  so  much  to  awaken  British  sentiment  as 
the  two  men  who  had  been  delegates  to  the  conference  of 
1878.  Goschen,  who  had  the  reputation  of  being  one  of  the 
best-informed  men  in  England  on  financial  matters,  was  es- 
pecially influential  in  arousing  the  commercial  and  industrial 
centres  of  the  kingdom.  Adressing  the  Bankers'  Institute  of 
London,  on  April  18,  1883,  he  called  attention  to  the  fact  that 
the  demand  for  gold  which  had  within  a  short  period  been 
made  by  Italy,  in  an  effort  to  resume  specie  payments,  by  Ger- 
many in  its  monetary  reform,  and  by  the  United  States  in 
trade  amounted  to  £200,000,000  —  a  demand  which  had  ab- 
sorbed a  sum  equal  to  ten  years'  supply  of  that  metal.1  At 
the  same  time  the  matter  was  the  subject  of  occasional  debate 
in  Parliament,  and  the  threatened  diminution  of  the  reserves 
of  the  bank  caused  considerable  alarm.  That  institution,  how- 


i  "  I  next  have  to  ask  from  what  annual  supply  of  gold  this  ex- 
traordinary demand  had  to  be  met?  Now,  many  of  you  may  be 
aware  that  there  has  been  a  falling  off  in  the  annual  supply  of  gold, 
and  that  while  in  1852  —  the  first  year  after  the  gold  discoveries  — 
the  amount  of  gold  produced  was  £30,000,000,  it  is  now  about  £20,- 
000,000  per  annum.  I  think  it  may  be  well  to  give  these  facts  in  a 
quinquennial  statement.  The  total  production  from  18.">2  to  1856  — 
in  those  five  years  —  was,  in  round  numbers,  £150,000,000,  giving  an 
annual  average  of  £30,000,000.  In  the  next  quinquennial  period,  from 
1857  to  1861,  the  total  production  was  £123,000,000,  giving  an  annual 
average  of  £24,600,000.  Between  1862  and  1866  the  total  amount 
produced  was  £114,000,000,  and  the  annual  average  £22,800,000;  and 
in  the  years  between  1867  and  1871  the  total  production  was  about 
£109,000,000,  with  an  annual  average  of  £21,753,000;  and  in  the  years 
between  1871  and  1875  the  total  production  was  £77,000,000,  and  the 
annual  average  £15,400,000.  Thus,  you  will  observe  that  we  have 
had  an  extraordinary  and  additional  demand  of  £200,000,000  sterling 
coming  upon  an  annual  supply  of  £20,000,000  sterling."  —  Goschen, 
before  Bankers'  Institute. 


A  SEASON  OP  PROSPERITY  IN  INDIA  831 

ever,  by  persistent  efforts  in  the  face  of  difficulties,  managed 
to  maintain  a  fair  reserve,  the  task  becoming  somewhat  easier 
on  account  of  the  cessation  of  German  purchases  and  the 
more  abundant  crops  on  the  continent  as  well  as  in  Great 
Britain  and  Ireland. 

Little  complaint  came  from  the  Indian  colony  during  the 
early  eighties.  The  alarm  for  the  future,  which  manifested 
itself  in  1876,  seems  to  have  been  calmed  by  a  remarkable 
expansion  of  the  export  trade  of  India.  In  spite  of  the  fall 
of  silver  in  relation  to  gold,  the  rupee  would  purchase  as  much 
of  other  commodities  in  India  as  ever,  a  fact  which  not  only 
gave  the  wheat  growers  of  the  Punjab  a  great  advantage,  but 
had  a  stimulating  effect  upon  other  industries.  During  the  five 
years  1877-81  the  average  annual  export  of  wheat  from  India 
was  5,000,000  cwts.,  and  during  the  five  years  1882-86  it  was 
19,000,000  cwts.  In  1874,  before  the  fall  of  silver  had  begun 
to  seriously  manifest  itself,  the  total  exports  of  yarn  from  the 
Indian  mills  to  China  and  Japan  amounted  to  only  1,000,000 
pounds.  In  1875,  when  silver  had  fallen  3c7.  per  ounce,  the 
1,000,000  pounds,  which  it  had  taken  India  nearly  ten  years  to 
reach,  suddenly  expanded  to  5,000,000  pounds.  By  1880  it 
was  25,000,000  pounds,  and  by  1885  it  was  75,000,000 
pounds,  which  was  nearly  three  times  more  yarn  than  the 
United  Kingdom  was  sending  to  Japan  and  China,  and  almost 
as  much  as  it  was  sending  to  China,  Japan,  and  India  to- 
gether. The  increasing  loss  on  remittances  to  England  on 
account  of  fixed  charges  naturally  occasioned  little  complaint 
from  the  Indian  government,  whose  ability  to  discharge  these 
obligations  was  increasing  somewhat  faster  than  the  gold 
value  of  the  rupee  fell.1  Shrewd  Indian  merchants  began  to 

'It  was  not  until  the  fiscal  year  188G-87  that  the  increase  in  home 
charges  due  to  a  declining  rate  of  exchange  began  to  absorb  India's 
favorable  balance  of  trade.  That  year  the  rate  dropped  to  17.4 
pence  per  rupee  and  the  year  following  to  16.8  pence. 


332  THE  STRUGGLE  FOR  GOLD 

regard  the  silver  standard  as  advantageous,  but,  of  course,  the 
functionaries,  who  were  paid  in  rupees,  which  on  being  re- 
mitted to  England  through  the  medium  of  exchange  were 
measured  at  their  gold  value,  regarded  it  in  a  far  different 
light.  So  did  the  Lancashire  manufacturers,  whose  business 
was  becoming  more  and  more  depressed,  and  who  began  to  ob- 
serve the  remarkable  development  of  Indian  competition  in 
the  great  Oriental  markets.  Nothing  is  so  painful  to  a  British 
manufacturer  as  the  sight  of  colonies,  which  he  considers  it  his 
vested  right  to  supply  with  goods,  not  only  filling  their  own 
markets  but  actually  usurping  the  trade  in  other  countries. 
"  Everything  for  England  and  nothing  for  India  "  was  the 
motto  which  was  popularly  supposed  to  give  a  general  descrip- 
tion of  the  commercial  relations  of  the  mother  country  to  the 
great  Asiatic  possessions.  They  were  intended  for  the  enrich- 
ment of  England.  Unfortunately,  matters  were  not  working  in 
that  agreeable  manner  at  that  time.  But  while  Lancashire  had 
reasons  for  bitter  complaint,  the  unsatisfactory  conditions  of 
trade  were  by  no  means  confined  to  its  industries.  Business, 
which  had  been  languishing  for  ten  years,  seemed  to  fall  flat  in 
1885,  and  the  complaints  were  so  numerous  and  came  from 
such  influential  sources  that  the  government  responded  by  ap- 
pointing a  royal  commission  to  investigate.  The  revenues  from 
the  railroads  in  England  were  £1,000,000  less  in  that  year 
than'in  1884.  The  returns  of  the  London  Clearing-IIouse  fell 
off  5  per  cent.  The  production  of  pig-iron  dropped  from 
7,530,000  tons  to  7,250,000.  The  number  of  bankruptcies 
increased  from  4394  to  5089.  The  reports  of  the  United 
States  consuls  in  Great  Britain  for  that  year  furnish  similar 
statistics  for  nearly  every  line  of  business.  The  value  of  the 
exports  fell  off  largely,  but  it  was  due  to  a  shrinkage  of  values 
rather  than  of  quantities,  and,  while  the  financial  centres  were 
anxious  to  avoid  the  appearance  of  suspecting  that  the  shrink- 
age was  the  work  of  an  appreciating  gold  basis,  the  manufact- 


EUROPEAN  STATES  ADOPT  THE  PROTECTIVE  POLICY  333 

uring  centres  openly  accused  the  sanctified  standard  of  Eng- 
lish money  as  the  cause  of  it  all.1 

The  opinion  was  also  held  by  a  small  group  that  England's 
free-trade  policy  was  responsible  for  it.  There  can  be  little 
doubt  that  the  tariff  policy  of  the  Continental  nations,  adopted 
largely  after  the  failure  of  the  conference  of  1881,  greatly  dis- 
turbed the  old  commercial  conditions,  with  disadvantage  to 
England.  But  these  tariff  changes  were  indirectly,  if  not 
directly,  due  to  the  scarcity  of  gold,  manifesting  itself  in  the 
reserves  of  the  banks.  We  have  already  referred  to  the  adop- 
tion of  a  high  tariff  in  Germany,  one  of  the  reasons  for  which, 
as  openly  declared,  was  the  necessity  of  forcing  a  favorable 
balance  of  trade.  France  followed  by  transforming  its  ad 
valorem  duties  into  those  collected  by  weight,  the  effect  being 
to  considerably  raise  rates.  Austria  adopted  the  protective 
policy  in  1882,  and  Switzerland  in  1885.  At  the  same  time 
these  countries  sought  in  every  way  possible  to  expand  their 
markets  abroad,  and  especially  in  the  United  States,  where  re- 
duction of  the  tariff  in  1883  was,  under  the  circumstances,  in- 
opportune. Our  heavy  exportations  they  considered  a  stand- 
ing menace  to  their  gold  reserves,  the  chief  remedy  for  which 
was  an  increased  sale  of  their  more  cheaply  produced  products 
in  America. 

A  strong  effort  was  made  in  Germany  to  inaugurate  a 

i  "  The  result  has  been  a  long,  slow,  grinding  adaptation  to  the 
new  conditions,  pressing  unequally  upon  nations  and  upon  individ- 
uals, and  intensely  aggravating  a  depression  which  in  all  probability 
would  have  occurred  without  concurrent  restriction  of  circulation  by 
various  nations,  but  which  would  have  been  in  all  probability  by  no 
means  so  severe.  This  subsidence  of  values  has  affected  Great 
Britain  quite  as  it  has  other  nations,  and  being  so  heavily  a  creditor 
of  the  world  and  the  richest  of  European  nations,  she  has  felt  the 
depression  at  last,  and  thus  while  Continental  countries  have  been 
driven  to  desperate  exertions  to  improve  and  cheapen  their  manu- 
factures and  to  find  new  and  to  enlarge  old  markets.  Great  Britain 
has  been  asleep;  and  now  when  the  pressure  is  upon  her  as  badly 
as  upon  others  she  wakes  up  to  find  Germans,  French,  and  Belgians 
actively  disputing  markets  which  she  thought  hers  by  prescription." 
—  Consular  Report  from  Bristol,  Eng.,  Jan.  7,  1887. 


334  THE  STRUGGLE  FOR  GOLD 

policy  of  buying  less  from  us  by  forming  a  "  Central  Euro- 
pean Zollverein."  The  aim  was  to  first  enter  into  a  commer- 
cial treaty  with  Austria-Hungary,  both  countries  embracing 
a  population  of  82,000,000  and  producing  articles  which 
mutually  supplemented  deficiencies.  Germany,  for  instance, 
would  buy  its  needed  breadstuffs  in  Austria-Hungary  instead 
of  America  and  India,  and  Austria-Hungary  would  buy  coal 
in  Germany,  instead  of  in  England.  A  German  paper,  which 
was  supposed  to  reflect  the  opinions  of  the  government,  said : 
"  Such  an  economical  union  once  established  between  the  two 
countries  mentioned  would  be  successively  joined  by  smaller 
states  of  Europe,  which,  like  Switzerland,  Belgium,  and  Hol- 
land, are  particularly  confined  to  exportation.  But  even 
Erance,  and  with  it  Italy  and  Denmark,  would,  in  joining  that 
union,  find  their  account  in  the  fight  against  economical  com- 
monwealths that,  like  the  United  States,  Russia,  China,  and 
Great  Britain,  embrace  whole  continents."  The  action  of  Ger- 
many, inspired  by  motives  of  this  kind,  largely  accounts  for  the 
fact  that  the  exports  of  both  England  and  the  United  States 
showed  such  a  decline  during  this  period  with  Continental 
countries  in  which  the  scarcity  of  gold  suggested  and  pro- 
duced the  protective  policy.  It  was  the  dominating  considera- 
tion behind  the  peculiar  crusade  against  American  meat  prod- 
ucts which  occasioned  so  much  diplomatic  correspondence 
at  that  time.  Had  Germany  been  certain  of  an  abundant  sup- 
ply of  gold  there  would  have  been  less  trichinosis  in  our  pork. 

The  year  1885  was  a  critical  one  for  the  Latin  Union. 
Switzerland  had  given  notice  of  a  desire  to  terminate  it. 
Erance  had  become  weary  of  the  mass  of  silver  belonging  to 
other  states  in  the  convention  and  was  resolved,  whether  the 
union  were  dissolved  or  not,  to  insist  upon  a  definite  plan  for 
the  redemption  by  the  different  states  of  their  respective  shares. 

The  Bank  of  France,  while  possessing  a  large  stock  of  gold, 
had  up  to  this  time  found  silver  taking  a  larger  and  larger 


DISAGREEMENTS  IN  THE  LATIN  UNION  335 

place  in  its  reserves,  and,  with  a  demand  for  gold  pressing  from 
all  sides,  the  government  was  determined  to  do  something  to 
relieve  the  situation.  So,  when  the  conference  for  the  purpose 
of  considering  the  renewal  of  the  treaty  was  called,  it  asked 
that  the  renewal  be  made  subordinate  to  an  engagement  to  be 
assumed  by  each  country  to  guarantee  the  value  of  their  5- 
franc  coins  and  pledging  to  refund  their  value  in  gold  at  the 
time  of  the  dissolution  of  the  union.  Belgium  vigorously  op- 
posed it,  maintaining  that  on  the  dissolution  of  the  union  any 
loss  should  be  charged  to  the  associated  states.  France  insisted, 
but  Belgium  would  concede  nothing,  except  that  no  obstacle 
would  be  placed  in  the  way  of  the  natural  return  of  her  silver 
coins.  Finally,  her  delegates  refused  to  subscribe  to  the  treaty, 
and  left  the  conference,  which  closed  its  sittings  August  4,  to 
reconvene  October  1.  Belgium  realized,  however,  that  the  dis- 
solution of  the  union  at  that  time  would  be  highly  disadvan- 
tageous to  its  finances  under  any  circumstances,  and  its  dele- 
gates returned  to  make  the  best  terms  they  could.  They  finally 
agreed  that  Belgium  should,  in  the  event  of  the  future  disso- 
lution of  the  union,  redeem  one-half  of  her  silver,  provided 
France  would  agree  that  the  remainder  should  not  be  re- 
patriated, except  in  the  course  of  natural  trade.  Belgium 
would  further  agree  not  to  modify  her  monetary  system  for 
five  years  after  such  a  dissolution.  On  this  basis  a  new  treaty 
was  finally  made,  one  of  the  clauses  being  that  any  country 
which  should  thereafter  issue  silver  coins  of  full  legal  tender 
should  always  stand  ready  to  redeem  them. 

The  Congress  at  Washington  continued  to  disregard  the 
advice  of  the  Treasury  Department  regarding  silver  coinage, 
though  an  attempt  was  made  late  in  the  Forty-eighth  Congress 
to  follow  it  by  attaching  to  the  sundry  civil  bill,  then  pending 
in  the  House,  a  provision  to  suspend  the  operation  of  the 
Bland-Allison  Act.  It  was  rejected  by  a  vote  of  118  to  152. 
The  campaign  of  1884  had  not  been  fought  on  financial 


336  THE  STRUGGLE  FOR  GOLD 

grounds;  both  parties  demanded  the  use  of  both  gold  and  silver 
as  legal  money  under  proper  restrictions  for  the  maintenance 
of  their  parity.  But  a  large  section  of  the  Democratic  party 
earnestly  favored  a  free-coinage  policy  for  the  United  States, 
irrespective  of  the  intentions  of  other  states,  and  it  was  an  un- 
pleasant surprise  to  this  faction  when  President-elect  Cleve- 
land began  early  in  1885  to  express  his  opposition  to  silver 
coinage  in  letters  to  members  of  Congress.  In  the  expecta- 
tion that  he  would  take  a  position  hostile  to  silver  in  his  in- 
augural, ninety-five  Democrats  in  the  House  addressed  to  him 
a  communication  requesting  that  he  should  not  commit  his 
party  to  such  a  position  till  all  phases  of  the  question  had  been 
fully  considered.  He  replied  in  a  very  direct  and  forcible 
manner,  on  February  24,  asserting  his  opinion  that  a  financial 
crisis  would  speedily  follow  if  the  coinage  of  silver  were  con- 
tinued; that  the  gold  in  the  Treasury  reserved  for  the  re- 
demption of  the  greenbacks,  if  not  already  encroached  upon, 
was  perilously  near  encroachment :  and  he  ended  by  expressing 
the  wish  that  they  would  concur  with  him  in  seeking  to  deliver 
the  people  from  the  impending  calamity,  which  might  at  any 
time  be  precipitated.  The  silver  men  replied  in  a  long  argu- 
ment for  their  metal.  They  pointed  out  that  France,  with  a 
population  of  36,000,000  and  a  territory  not  as  large  as  Texas, 
had  in  circulation  $600,000,000  of  silver  with  $850,000,000 
of  gold  while  the  United  States  had  but  $200,000,000  of  full 
legal-tender  silver  to  over  $600,000,000  of  gold.  With  this 
proportion  in  our  currency,  they  said,  and  with  gold  and  silver 
equally  full  legal  tender  for  everything,  it  was  difficult  to  un- 
derstand why  the  Secretary  of  the  Treasury  might  not,  if  lie 
chose  to  do  so,  pay  out  more  silver  and  less  gold.  They  could 
easily  see  that,  while  receiving  into  the  Treasury  United  States 
notes,  silver,  silver  certificates,  gold,  and  gold  certificates,  if  he 
paid  out  only  gold,  his  stock  of  gold  would  diminish,  but,  if  in- 
stead, he  paid  out  more  silver,  how,  they  asked,  could  the 


SPECIOUS  ARGUMENTS  OF  SILVER  MEN  337 

character  of  the  reserve  change?  In  regard  to  the  predictions 
of  the  different  Secretaries  of  the  Treasury,  to  which  the 
President-elect  had  referred,  they  reminded  him  that  expe- 
rience had  proved  them  to  have  been  baseless,  that  gold  had 
continued  to  accumulate  in  the  country  since  the  coinage  of  sil- 
ver was  begun,  that  it  never  possessed  so  much  gold  as  then, 
and  that  $80,000,000  of  the  gold  in  the  Treasury  had  been  put 
there  in  exchange  for  silver  certificates. 

If  the  warnings  of  the  Treasury  Department  had  been 
somewhat  overdrawn,  the  argument  of  the  silver  men  was 
specious.  Gold  could  not  have  failed  to  accumulate  in  this 
country  under  the  commercial  conditions  that  had  prevailed 
since  1878,  with  Europe  clamoring  for  our  breadstuffs;  it  could 
not  fail  to  accumulate  in  the  Treasury  in  the  process  of  ex- 
change for  silver  certificates  when  currency  was  in  active  de- 
mand to  meet  extraordinary  business  requirements ;  and,  while 
they  cited  the  example  of  France  in  keeping  a  vast  amount  of 
silver  in  circulation,  they  ignored  the  fact  that  France  had 
coined  no  legal-tender  silver  for  seven  years,  and  that  the  Bank 
of  France,  which  had  the  option  of  paying  in  either  gold  or 
silver,  could  not  prevent  the  overloading  of  its  reserves  with 
silver  and  the  consequent  danger  to  its  notes.  France,  more- 
over, was  a  creditor  nation,  while  the  United  States  were  regu- 
larly compelled  to  pay  fully  $100,000,000  in  annual  interest 
or  earnings  on  various  securities  or  investments  held  abroad. 
Only  by  maintaining  a  favorable  balance  to  that  amount  in  our 
foreign  trade  could  we  keep  our  gold,  for  Europe  took  very 
little  of  our  silver,  except  that  which  wras  intended  for  India. 

At  the  very  end  of  the  session,  March  3,  the  Senate  passed 
a  resolution  requesting  the  executive  to  resume  negotiations 
with  the  powers  in  the  interests  of  a  bimetallic  agreement, 
but  it  was  too  late  to  secure  action  in  the  House.  The  step  ap- 
pears to  have  been  suggested  by  those  close  to  the  President- 
elect. While  on  assuming  office  he  adhered  to  his  policy  for 
22 


338  THE  STRUGGLE  FOR  GOLD 

the  suspension  of  silver  coinage,  and,  so  far  as  he  could,  com- 
mitted influential  members  to  it,  he  at  once  undertook  to  sound 
the  European  powers  in  relation  to  international  action.  The 
probability  that  when  the  Forty-ninth  Congress  met  in  De- 
cember another  free-silver  crusade  would  be  begun  may  have 
had  some  influence  in  his  determination  upon  this  course ;  but, 
on  the  other  hand,  the  facts  seem  to  warrant  the  conclusion  that 
his  administration  would  have  gladly  approved  of  the  free 
coinage  of  silver  with  the  co-operation  of  the  other  large  states. 

The  consul-general  at  Paris  was  instructed  to  present  to 
the  delegates  to  the  conference  of  the  Latin  Union  an  expres- 
sion of  the  interest  in  its  objects  felt  by  this  country,  and  to 
sound  them  on  the  practicability  of  reopening  negotiations 
under  the  plan  suggested  by  the  conference  of  1881.  Early 
in  May,  also,  Manton  Marble,  of  New  York,  was  appointed  a 
special  commissioner  "  to  proceed  to  Europe  and  by  personal 
conference  with  the  expert  advisers  and  statesmen  of  the  prin- 
cipal governments  to  ascertain  the  present  opinions  and  pur- 
poses of  those  governments  in  respect  to  such  an  establishment, 
internationally,  of  a  fixed  relative  value  between  the  two 
metals,"  and  to  the  international  use  of  both  metals  as  legal 
tender. 

The  Ministers  to  France,  Germany,  and  England,  were 
asked  to  act  in  conjunction  with  Marble,  affording  him  any 
assistance  possible,  and  to  report  their  own  observations  and 
conclusions.  Consul-General  Walker,  at  Paris,  was  permitted 
to  present  a  statement  of  the  position  of  the  United  States  to 
the  conference  of  the  Latin  Union,  but  any  interest  in  the  sub- 
ject of  renewed  negotiations  with  a  view  to  an  international 
agreement  was  eclipsed  by  the  critical  condition  of  the  mat- 
ter immediately  before  the  conference,  and  in  August  Walker 
reported  to  the  State  Department  concerning  the  inharmonious 
character  of  the  debate  up  to  the  time  of  the  adjournment  to 
October,  and  of  his  efforts  to  secure  a  consideration  of  the 


REPORTS  OF  AMERICAN  MINISTERS  339 

matters  of  particular  interest  to  the  government.  His  con- 
clusion of  the  whole  matter  was  that  "  nothing  would  so  hasten 
the  adoption  of  the  bimetallic  theory  in  Europe  as  the  sus- 
pension of  silver  coinage  in  the  United  States."  This  was 
no  sinister  opinion.  At  about  the  same  time  Goschen  de- 
clared to  the  Manchester  Chamber  of  Commerce  that  there 
was  no  hope  of  the  improvement  of  the  financial  situation 
until  it  was  known  what  the  United  States  would  do  with  the 
Bland  Bill. 

During  October  the  Ministers  made  their  reports,  and  they 
generally  agreed.  The  Minister  at  London,  E.  J.  Phelps,  said 
that,  acting  with  Marble,  he  had  secured  free  and  protracted 
conferences  with  the  government,  and  Marble  had  also  been  in 
confidential  communication  with  those  members  having  official 
relations  to  the  subject.  These  interviews  had  been  full  and 
exhaustive,  the  whole  ground  had  been  gone  over,  and  he  said 
the  British  officials  had  expressed  their  opinions  frankly,  and 
the  information  could  be  depended  upon  as  representing  the 
attitude  then  occupied,  and  likely  to  be  maintained,  by  the 
British  government.  "  From  these  and  other  sources,"  said  the 
Minister,  "  I  am  satisfied  that  the  British  government  will  in- 
flexibly adhere  to  their  past  and  present  policy  in  respect  to 
coinage,  that  they  will  not  depart  from  the  gold  standard  nor 
become  a  party  to  any  bimetallic  union  to  make  silver  a  legal 
tender  in  Great  Britain."  The  Minister  at  Paris  said :  "While 
France  would  gladly  receive  the  intelligence  that  the  United 
States  would  adopt  the  French  ratio  of  15.50  of  silver  to  1  of 
gold,  no  consideration  of  future  consequences,  whether  for 
good  or  evil,  could  induce  her  to  adopt  the  American  ratio  of 
16  to  1  —  still  less  would  she  adopt  any  higher  ratio  to  as- 
similate the  present  commercial  or  market  value  of  silver  with 
the  value  of  gold,  nor  would  she  consent  to  any  ratio  now  to 
permit  an  unrestricted  or  even  a  limited  coinage  at  her  mints." 

This  seemed  to  indicate  that  the  position  of  France  had  be- 


340  THE  STEUGGLE  FOR  GOLD 

come  less  favorable,  but  it  was  only  so  because  of  domestic  con- 
siderations. France  was  still  favorable  to  a  general  bimetallic 
agreement  on  her  ratio,  but  she  would  not  have  consented  to 
a  modification  of  her  ratio,  and  there  had  not  been  a  time 
since  the  bimetallic  agitation  began  when  she  would  have  done 
so,  though  this  country  had  persistently  overlooked  the  fact. 
After  the  failure  of  the  conference  of  1881,  France  threw 
away  theoretical  considerations  largely,  and  regarded  silver 
coinage  from  a  purely  domestic  basis.  She  had  just  taken  steps 
to  make  a  very  complete  count  of  the  relative  proportion  of 
silver  and  gold  in  circulation,  and  it  appeared  that  the  silver 
had  increased  enormously.  There  were  a  billion  francs  of 
foreign  silver  in  the  Republic,  that  is,  coins  of  other  states  of 
the  Latin  Union;  of  these  465,000,000  francs  belonged  to  Bel- 
gium, and  435,000,000  to  Italy.  If  the  countries  should  refuse 
to  redeem  these  coins  France  would  incur  a  loss  of  at  least 
600,000,000  francs.  It  is,  therefore,  easy  to  understand  the 
attitude  of  self-defence  that  France  took,  and  why  the  debates 
in  the  conference  of  the  Latin  Union  were  so  prolonged  and 
so  inharmonious. 

The  Minister  at  Berlin  reported  that,  while  the  bimetallic 
sentiment  had  been  making  great  headway  in  Germany,  the 
government  would  consider  an  agreement  impracticable  unless 
England  and  Russia  joined  it,  and  it  was  frankly  declared  that 
the  adherence  of  England  was  for  Germany  a  sine  qua  non. 
A  long  debate  had  arisen  in  the  Reichstag,  and  bimetallism 
was  strongly  advocated,  but  that  body  refused  to  amend  the 
laws  of  1871  and  1873,  and  a  motion  to  instruct  the  govern- 
ment to  open  negotiations  with  other  powers  was  defeated, 
though,  it  was  said,  for  political  reasons  mainly. 

With  this  information  from  abroad,  the  President  met 
Congress  when  it  assembled  in  December,  with  a  strong  ap- 
peal for  the  suspension  of  silver  coinage.  He  maintained  that 
the  most  vital  part  of  the  act  of  1878  remained  inoperative, 


THE  INDIAN  GOVERNMENT  BECOMES  ALARMED  841 

because  the  conference  for  international  action  had  failed,  and 
that  without  an  ally  and  friend  we  battled  upon  the  silver 
field  in  an  illogical  and  losing  contest.  The  report  of  Secretary 
Manning  was  a  vigorous  and  elaborate  review  of  the  monetary 
history  of  the  government,  a  statement  of  existing  conditions, 
and  a  demonstration  from  his  point  of  view  of  the  urgency 
of  the  repeal  of  the  silver  act.  "  In  but  one  way  now,"  he  said, 
"  can  any  nation  retain  in  use  coins  of  both  metals  which  are 
both  unlimited  legal  tender;  namely,  by  stopping  the  coinage 
of  the  metal  unacceptable  to  other  nations.  France  has  done 
so.  The  United  States  must  likewise  stop  coining  silver.  Stop, 
wait,  negotiate." 

But  not  long  after  this  steps  were  taken  in  England  which, 
to  the  administration  at  least,  seemed  encouraging  indications 
of  a  change  in  the  opinion  of  the  English  government.  In 
January,  1886,  while  the  Select  Committee  on  the  Depres- 
sion of  Trade  were  still  pursuing  their  investigations,  a 
correspondence,  apparently  of  considerable  significance,  was 
opened  between  the  Indian  Office  of  the  home  government  and 
the  Treasury.  The  first  letter  from  the  Secretary  of  State 
for  India  closed  with  these  words:  "  Lord  Randolph  Churchill 
desires  at  the  same  time  most  earnestly  to  press  upon  my 
Lords  the  importance  of  making  every  endeavor  that  is  possi- 
ble to  bring  about  by  international  agreement  some  settle- 
ment of  the  question  how  the  free  coinage  of  silver  may  be 
revived,  and  the  comparative  stability  of  the  relative  value 
of  gold  and  silver,  which  is  so  essential  for  the  regular  course 
of  trade,  and  which  is  of  such  vital  importance  to  India,  may 
be  secured."  This  urgent  appeal  was  supported  by  a  tele- 
gram from  the  government  of  India  saying :  "  We  are  of 
opinion  that  the  interests  of  British  India  imperatively  de- 
mand that  a  determined  effort  should  be  made  to  settle  the  sil- 
ver question  by  international  agreement.  Until  this  is  done 
we  are  drifting  into  a  position  of  the  most  serious  financial  em- 


342  THE  STRUGGLE  FOR  GOLD 

barrassment,  in  regard  to  the  consequences  of  which,  not  only 
as  regards  our  financial  position,  but  in  respect  of  measures  of 
taxation  in  relation  to  our  rule  of  British  India,  it  is  irnpossi* 
ble  not  to  be  seriously  apprehensive." 

Just  at  this  important  moment  Congress  embraced  the 
opportunity  to  introduce  and  discuss  another  bill  for  the  free 
coinage  of  silver.  It  was  reported  adversely  by  the  Coinage 
Committee,  and,  when  it  came  up  in  the  House,  a  substitute 
was  offered  providing  that  unless  prior  to  July  1,  1889,  silver 
was  remonetized  "  through  the  concurrent  action  of  the  nations 
of  Europe  with  the  United  States,"  coinage  under  the  act  of 
1878  should  be  discontinued.  This  proposition,  which,  had  it 
been  adopted,  would  in  all  probability  have  had  a  marked 
effect  on  the  attitude  of  the  English  government  at  that  time, 
was  rejected  on  April  8,  1886,  by  a  vote  of  only  84  yeas  to 
201  nays. 

The  reply  of  the  English  Treasury  Department  to  the  letter 
of  the  Secretary  of  State  for  India  was  made  in  May,  the  gov- 
ernment, meanwhile,  having  changed  hands,  so  that  the  opin- 
ion delivered  was  that  of  Gladstone's  ministry.  It  was  to  the 
effect  that  it  could  take  no  measures  for  summoning  or  co- 
operating in  a  new  monetary  conference  until  it  had  previously 
determined  what  policy  it  should  initiate  or  consent  to.  The 
whole  subject,  the  government  understood,  was  under  consid- 
eration of  the  Commissioners  on  the  Depression  of  Trade, 
but  the  Treasury  said  it  could  find  nothing  in  the  correspond- 
ence and  information  before  them  to  induce  it  to  depart  from 
the  instructions  given  to  the  British  representatives  in  1881. 

This  commission  had  taken  a  large  amount  of  testimony 
and  secured  all  available  statistics.  Some  difference  of  opinion 
was  manifest  among  its  members  as  to  the  causes  of  the  depres- 
sion, but  as  to  its  nature  they  agreed  in  the  definite  conclusion 
that  it  dated  from  1873  or  thereabouts,  that  it  extended  to 
every  branch  of  industry,  and  was  not  confined  to  England, 


STEPS  IN  ENGLAND  FOK  AN  INTERNATIONAL  AGREEMENT         343 

that  it  appeared  to  be  closely  connected  with  a  serious  fall  of 
prices  resulting  in  the  diminution  and  in  some  cases  the  total 
loss  of  profits  and  consequent  irregularity  of  employment  to 
the  wage-earner,  that  its  duration  had  been  most  unusual  and 
abnormal,  and  that  no  adequate  cause  was  discoverable  unless 
it  could  be  found  in  some  general  dislocation  of  values,  caused 
by  currency  changes  capable  of  affecting  an  area  equal  to  that 
which  the  depression  covered.  The  third  report  of  the  com- 
mission, which  was  presented  soon  after  the  Treasury  had 
replied  to  the  Indian  Secretary  that  it  could  discover  in  the 
evidence  no  reason  for  a  change  in  the  attitude  of  the  govern- 
ment, entered  into  the  causes  of  the  change  in  the  conditions 
of  gold  and  silver,  and  ended  by  recommending  that,  on  ac- 
count of  the  importance  and  nature  of  the  subject,  another 
commission  be  appointed  to  investigate  "  the  recent  changes  in 
the  relative  values  of  the  precious  metals." 

It  so  happened  that  by  the  return  of  the  Tory  party  to 
power  in  the  elections  of  July,  precipitated  by  the  defeat  of 
one  of  Gladstone's  Irish  bills  in  Parliament,  this  recommenda- 
tion fell  into  the  hands  of  those  who  had  made  it.  Meanwhile 
several  petitions  for  the  appointment  of  such  a  commission 
were  prepared,  one  signed  by  24*3  members  of  the  House  of 
Commons,  and  requesting  an  inquiry  as  to  "  remedies  within 
the  power  of  the  legislature  or  the  government  by  itself,  or  in 
concert  with  other  powers,  which  would  be  effectual  in  remov- 
ing or  palliating  the  evils  or  inconveniences  without  injustice 
to  other  interests  and  without  causing  other  evils  and  incon- 
veniences equally  great."  In  the  Tory  cabinet  there  was  a 
new  distribution  of  offices.  The  First  Lord  of  the  Treasury, 
Iddesleigh,  and  the  Chancellor  of  the  Exchequer,  Hicks- 
Beach,  who  had  successively  held  the  leadership  of  the 
House  of  Commons,  were  translated  to  other  functions. 
There  may  have  been  no  significance  in  this,  so  far  as 
the  monetary  question  was  concerned,  but  it  was  a  fact, 


344  THE  STRUGGLE  FOR  GOLD 

nevertheless,  that  Iddesleigh,  whose  opinions  Gladstone's  gov- 
ernment had  cited  in  May  in  support  of  the  maintenance  of 
England's  traditional  policy  in  its  reply  to  Churchill,  was  not 
placed  in  the  Treasury,  and  Churchill,  who,  as  Secretary  of 
State  for  India,  had  in  January  urged  every  endeavor  for  an 
international  agreement  for  the  free  coinage  of  silver,  was  made 
Chancellor  of  the  Exchequer,  and  took  the  leadership  of  the 
House  of  Commons.  In  that  capacity,  September  7,  Churchill 
announced  as  members  of  the  Gold  and  Silver  Commission, 
Lord  Herschell,  chairman;  Sir  Charles  Fremantle,  Sir  John 
Lubbock,  T.  H.  Farrar,  J.  W.  Birch,  Leonard  "W.  Court- 
ney, Sir  Louis  Mallet,  Arthur  Balfour,  Sir  David  Barbour, 
Sir  William  Houldsworth,  Sir  Samuel  Montagu,  and  Henry 
Chaplin. 

Not  calculated  to  diminish  the  uneasiness  of  European 
financial  circles  at  this  time  were  the  facts  that  Italy  was  ab- 
sorbing considerable  gold  by  its  loans  for  resumption  purposes, 
that  Russia  began  to  retain  a  larger  portion  of  its  gold  product 
as  a  result  of  its  new  monetary  law,  which  went  into  effect 
January  1,  1886,  and  which  provided  for  the  free  coinage  of 
gold,  while  coinage  of  silver  on  private  account  was  prohibited, 
though  the  monetary  unit  was  the  silver  rouble,  and  the  mer- 
cantile crisis  which  was  afflicting  Netherlands  India,  and  which 
was  attributed  by  the  Java  authorities  to  the  workings  of  the 
gold  standard.  The  whole  influence  of  the  Indian  government 
was  exerted  in  favor  of  concerted  action.  In  a  dispatch  sent  to 
the  Treasury  upon  the  appointment  of  the  Royal  Commission 
it  said :  "  In  no  other  way  than  that  of  international  agree- 
ment can  a  lasting  and  satisfactory  order  be  brought  about,  and 
we  trust  that  Your  Majesty's  government  will  give  up  its  posi- 
tion of  absolute  isolation  —  a  position  which  we  venture  to  be- 
lieve is  indefensible  in  theory  and  in  practice  is  fraught  with 
danger  both  for  England  and  for  India;"  and  in  conclusion, 
"  "We  do  not  hesitate,  therefore,  to  repeat  emphatically  that, 


SECRETARY  MANNING'S  HOPES  OF  AN  AGREEMENT  345 

from  the  standpoint  of  Indian  finances,  the  situation  has  be- 
come intolerable." 

The  stubborn  attitude  of  President  Cleveland  towards  sil- 
ver coinage  had  a  quieting  effect  upon  the  silver  element  in 
the  party,  and  during  his  first  administration  there  was  com- 
paratively little  agitation,  the  fear  of  offending  the  executive 
who  had  so  much  patronage  to  bestow  overbalancing  any  de- 
votion they  had  to  silver  principles.  Some  criticisms  of  the 
President  were  uttered  in  Congress,  notably  by  Senator  Beck ; 
but,  as  Senator  Edmunds  said,  "  the  Democratic  party  was  wise 
enough  for  a  wonder  —  wise  enough  for  a  wonder  —  -  to  be  ab- 
solutely silent  upon  that  topic."  But  any  effort  to  secure  the 
repeal  of  the  silver-coinage  act  was  quickly  strangled.  In  his 
report  of  December,  188G,  Secretary  Manning  said  that  "  if 
the  law  were  repealed  which  makes  compulsory  Treasury  pur- 
chases of  silver,  and  if  that  repeal  were  accompanied  by  the 
declaration  of  Congress  that  the  United  States  "  would  hold 
itself  in  readiness  to  unite  with  France,  Germany,  and  Great 
Britain  in  opening  their  mints  to  the  free  coinage  of  silver 
and  gold  at  a  ratio  fixed  by  international  agreement,  it  was  his 
deliberate  judgment  "  that  before  the  expiration  of  another 
fiscal  year  this  international  monetary  dislocation  might  be 
corrected  by  such  an  international  concurrence,  the  two  metals 
restored  to  their  old  and  universal  function  as  the  one  standard 
measure  of  prices  for  the  world's  commodities,  the  depression 
of  trade  and  industry  relieved,  and  a  general  prosperity  re- 
newed." But  the  picture  had  no  effect.  It  was  feared  by  both 
parties  that  a  stoppage  of  coinage  would  be  interpreted  by  the 
people,  who  were  not  supposed  to  be  sufficiently  enlightened  to 
understand  the  international  aspects  of  the  situation,  as  an  act 
of  hostility  to  the  white  metal,  and  that  the  consequence  would 
be  some  political  disadvantage.  The  getting  of  votes  was  a 
dominating  consideration. 

The  President  continued  to  keep  an  eye  on  Europe,  in 


346  THE  STRUGGLE  FOR  GOLD 

the  hope  of  discovering  a  moment  sufficiently  ripe  for  calling 
another  conference.  The  repeated  warnings  of  men  like 
Goschen  in  England,  and  the  growing  strength  of  bimetallism 
in  Germany,  together  with  a  complete  suspension  of  her  money 
reform,  seemed,  indeed,  to  promise  such  a  moment.  With  a 
view,  doubtless,  of  allowing  no  opportunity  to  slip,  early  in 
1887  he  sent  another  commissioner  to  Europe,  Edward  At- 
kinson, to  ascertain  the  exact  condition  of  foreign  sentiment 
and  report  whether  it  would  be  wise  to  bring  about  another 
conference.  Atkinson  certainly  did  not  go  with  any  marked 
prepossessions  in  favor  of  bimetallism,  and  he  brought  back 
none,  though  we  must  assume,  even  if  it  is  difficult  to  believe, 
that  he  entered  into  the  spirit  of  the  government  he  repre- 
sented. He  began  his  work  in  June,  and  reported  in  October. 
He  appears  to  have  approached  the  foreign  govern- 
ments from  a  standpoint  differing  widely  from  that  of  his 
predecessor,  Marble,  his  method  being  to  represent  that  the 
payment  of  all  the  interest-bearing  bonds  which  were  then 
due,  the  impending  contraction  of  the  paper  currency  by  the 
consequent  withdrawal  of  bank  notes  from  circulation,  the 
probable  accumulation  of  the  surplus  revenue  in  the  Treasury 
in  the  form  of  legal-tender  United  States  notes  or  coin,  and 
other  influences,  might  soon  render  important  legislation  an 
absolute  necessity,  both  in  respect  to  our  monetary  system  as 
well  as  to  the  reduction  of  taxation.  "  This  contraction  of  the 
paper  currency,"  he  told  them,  according  to  his  report,  "  might, 
or  must,  in  almost  any  case  continue  long  enough  to  render  the 
circulating  medium  of  the  United  States  insufficient  for  the 
wants  of  the  country."  Whether  this  line  of  argument  was 
suggested  by  the  administration,  or  was  adopted  by  the  com- 
missioner on  his  own  judgment,  it  was  precisely  the  kind  of 
argument  which  was  calculated  to  weaken  any  sentiment  for- 
eign governments,  and  especially  the  English  government, 
may  have  had  in  favor  of  immediate  steps  for  an  international 


EDWARD  ATKINSON'S  DIPLOMATIC  EFFORT  347 

agreement.  Atkinson  used  the  argument  to  show,  as  his  re- 
port says,  that  "  a  heavy  and,  perhaps,  a  long-continued  draft 
of  gold  might  be  made  upon  the  reserves  of  coin  in  Europe 
to  fill  the  gap."  But  the  possibility  that  the  currency  of  the 
United  States  would  become  contracted  only  suggested  to 
shrewd  Europeans  the  greater  probability  that  Congress  would 
provide  a  larger  use  of  silver  —  the  probability  that  had  for 
so  long  stood  in  the  way  of  securing  the  cordial  co-operation 
of  foreign  governments.  Atkinson's  further  suggestion,  that 
the  taxes  might  be  reduced,  was  calculated  to  cause  the  British 
government  to  withdraw  completely  into  its  hole;  for  in  the 
reduction  of  our  tariff  was  grounded  its  hope  of  such  an  en- 
largement of  its  export  trade  to  this  country  as  would  prevent 
any  drain  of  gold  from  the  Bank  of  England,  and  it  might 
enable  it,  as  the  bank  of  a  creditor  nation,  to  draw  from  our 
gold  stock.  With  such  a  pleasing  picture  held  out  before  them, 
the  commissioner  could  hardly  fail  to  receive  an  assurance  that 
England  proposed  to  adhere  to  its  traditional  policy.  In  the 
European  discussions  the  fact  that  our  tariff  enabled  us  to  com- 
mand gold  and  added  to  its  scarcity,  and  to  the  consequent 
embarrassment  in  Europe,  had  been  freely  and  continually 
commented  on.1  It  was  not  simply  a  theory,  but  a  conviction, 
and  it  has  been  admitted  by  low-tariff  men 2  in  this  country 
when  talking  of  money  and  not  of  protection.  It  was  this  con- 

1  "  Until  now  Europe  has  been  able  without  difficulty  to  furnish 
the  United  States  of  America  the  quantity  of  gold  required  for  the 
payment  of  the  supplies  of  food  which  the  former  has  imported;  but 
if  this  situation  continues,  if  several  bad  harvests  in  Europe  render 
necessary  the  continued  importations  of  provisions  from  America, 
and  if  the  latter  country,  in  pursuance  of  its  protectionist   policy,   pre- 
vents  Europe   from   paying  in   European  products  and  manufactured 
articles,  then  the  exportation  of  gold  to  America  must  go  on."— Letter 
of  Moritz  Levy,  Delegate  of  Denmark  to  the  Conference  of  1881,  pre- 
sented at  ninth  session,  June  30th. 

2  "  On  account  of  our  tariffs,  Europe  was  unable  to  send  us  com- 
modities for  the  entire  volume  of  our  exports,  but  had  to  pay  for 
these  in  great  part  by  gold.     The  European  supply  of  this  metal  fell 
off  considerably,  and  France  was  the  worst  sufferer."— E.  Benjamin 
Andrews  in  Political  Science  Quarterly,  June,  1893. 


348  THE  STRUGGLE  FOR  GOLD 

viction  which  had  led  to  an  increase  in  the  tariffs  in  Europe 
already  referred  to.  The  governments  defended  the  step  on 
the  ground  that  it  enabled  them  to  protect  their  gold.  We  are 
saying  nothing  now  as  to  the  defensibility  of  a  protective  tariff 
from  a  purely  economic  point  of  view,  for  in  this  history  we  are 
not  immediately  concerned  with  theories,  but  with  practical 
conditions  and  results.  The  suspension  of  the  coinage  of 
silver  in  this  country  was  needed  to  induce  the  principal  nations 
of  Europe  to  listen  to  the  suggestion  of  a  conference;  the  low- 
ering of  duties  on  articles  manufactured  in  Europe  was  ad^ 
mirably  adapted  to  transform  the  European  attitude  of  ex- 
pectancy into  a  fixed  determination  to  adopt  the  gold  standard. 
Commissioner  Atkinson  indirectly  encouraged  the  hope  of 
an  enlarged  use  of  silver  in  the  United  States,  and  directly  the 
hope  of  a  reduction  of  customs  duties.  We  are  thu^  quite  pre- 
pared for  the  results  of  his  investigation. 

"  Having,"  his  report  says,  "  thus  stated  how  I  have  en- 
deavored to  perform  the  duties  assigned  to  me,  I  now  report 
that  in  my  judgment: 

"  (1)  There  is  no  prospect  of  any  change  in  the  present 
monetary  system  of  European  states  which  can  modify  or  in- 
fluence the  financial  policy  of  the  United  States  at  the  present 
time. 

"  (2)  There  are  no  indications  of  any  change  in  the  policy 
of  the  financial  authorities  of  the  several  states  visited  by  me 
which  warrant  any  expectation  that  the  subject  of  a  bimetallic 
treaty  for  a  common  legal  tender,  coupled  with  the  free  coin- 
age of  silver,  will  be  seriously  considered  at  the  present  time 
by  them. 

"  (3)  There  is  no  indication  that  the  subject  of  bimetallism 
has  received  *any  intelligent  or  serious  consideration  outside  of 
a  small  circle  in  each  country  named,  as  a  probable  or  possible 
remedy  for  the  existing  cause  of  alleged  depression  in  trade. 

"  (4)  There  is  no  considerable  politically  organized  body  of 


THE  STATE  OP  EUROPEAN  OPINION  849 

influential  persons  in  either  country  with  whom  a  combination 
could  be  made,  if  such  a  combination  or  co-operation  were  de- 
sirable on  the  part  of  a  similar  body  in  the  United  States,  for 
promoting  any  definite  or  practicable  measures  to  bring  about 
the  adoption  of  the  bimetallic  theory  according  to  the  com- 
monly accepted  meaning  of  that  term.  The  discussion  is  as  yet 
almost  wholly  personal  and  without  any  concentration  of  pur- 
pose, or  the  presentation  of  any  well-devised  measure,  capable 
of  being  acted  upon." 

He  also  stated  that  the  possibility  of  a  bimetallic  treaty 
without  the  concurrence  of  Great  Britain,  which  had  been 
suggested,  had  no  prospect,  apparently,  even  of  considera- 
tion in  Germany,  and  very  little  elsewhere.  The  important 
point,  which,  he  said,  he  wished  to  present,  was  that  he  had 
become  convinced  from  his  own  observation  and  that  of  others 
"  that  it  would  be  unwise  and  inexpedient  for  the  United  States 
again  to  take  the  initiative  in  promoting  action  for  a  general 
adoption  of  a  bimetallic  legal  tender,  coupled  with  the  free 
coinage  of  silver,"  for  the  reason  that  such  action  is  miscon- 
strued, and  may  tend  to  retard,  rather  than  promote,  the  object 
aimed  at.  He  found  among  the  financiers  of  Europe  a  con- 
viction that  the  United  States  government  was  loaded  with  an 
excessive  quantity  of  silver  dollars,  which  it  could  not  get  into 
circulation,  and,  in  his  opinion,  therefore,  any  effort  to  pro- 
mote a  bimetallic  treaty  would  not  be  regarded  as  a  sincere 
effort  to  promote  a  better  monetary  system,  of  which  all  nations 
could  share  the  benefit,  but  rather  as  being  induced  by  a  desire 
to  promote  the  special  interest  of  the  United  States  at  the  cost 
of  whom  it  might  concern.  Another,  and  a  natural  conclusion, 
was  that  so  long  as  the  coinage  of  the  silver  dollar  was  con- 
tinued, no  proposition  for  a  bimetallic  treaty  could  be  enter- 
tained by  European  states,  since  they  would  not  consider  under 
any  circumstances  a  proposition  for  a  recoinage  of  their  own 
silver  in  order  to  adjust  it  to  the  ratio  in  the  United  States. 


350  THE  STRUGGLE  FOR  GOLD 

Atkinson  also  informed  the  President  in  his  report  how  he 
had  pointed  out  to  the  Europeans  .that  the  concurrence  of  the 
United  States  in  any  agreement  might  be  secured  more  easily 
at  that  time  than  thereafter,  on  account  of  the  probability  of 
the  currency  changes  he  had  suggested,  information  which 
must  have  afforded  the  foreign  officials  an  abundance  of  quiet 
amusement,  coming  from  a  government  that  had  been  press- 
ing for  a  bimetallic  agreement  for  ten  years,  and  was  watching 
anxiously  for  an  opportunity  to  call  another  conference,  a 
government,  moreover,  the  great  majority  of  whose  legislature 
absolutely  refused  to  stop  the  limited  coinage  of  silver,  and  an 
increasing  portion  of  which  was  demanding  the  free  coinage 
of  silver  in  utter  disregard  of  Europe  or  its  intentions.  An 
able  theorist  is  rarely  a  successful  diplomat. 

The  international  bimetallic  bucket  was  completely  upset 
in  December,  1887,  when  the  President  met  the  Fiftieth  Con- 
gress with  his  famous  dissertation  on  the  tariff.  Congress 
immediately  went  to  work  to  give  it  a  legislative  embodiment. 
The  President  had  given  his  party  a  new  idea,  the  first  that  it 
had  possessed,  all  to  itself,  since  the  war,  and  it  became  so  ab- 
sorbed in  it  that  silver  was  almost  entirely  forgotten.  Even 
the  President  ignored  the  subject  which  two  years  before  had 
led  him  to  appeal  to  his  party  to  deliver  the  people  from  the 
certain  disaster  that  awaited  them  if  the  coinage  of  silver  was 
continued.  The  Secretary  of  the  Treasury  was  exceedingly 
mild  in  his  references  to  the  matter,  suggesting  only  a  modifica- 
tion of  the  law  so  that  its  operation  could  be  suspended  when 
the  silver  in  the  Treasury  exceeded  a  certain  amount.  De- 
pressed European  industries  waited  expectantly  for  the  lower- 
ing of  the  gates,  and  European  governments  confidently  antici- 
pated a  return  of  the  yellow  tide. 

During  1888  the  public  affairs  which  absorbed  the  atten- 
tion of  the  people  of  the  United  States  were  the  tariff  debate 
and  a  presidential  campaign  and  election.  The  noteworthy 


REPORT  OF  THE  ENGLISH  GOLD  AND  SILVER  COMMISSION         351 

monetary  event  abroad  was  the  final  report  of  the  English  Gold 
and  Silver  Commission,  embracing  its  conclusions.  By  its 
painstaking  investigation  it  contributed  a  valuable  addition 
to  the  already  enormous  stock  of  information,  statistical  and 
otherwise,  on  monetary  matters.  Its  conclusions  were  divided 
into  three  parts :  the  first,  as  to  some  of  the  general  features  of 
the  situation,  and  signed  by  all  the  commissioners ; '  the  second, 
a  statement  signed  by  Herschell,  Fremantle,  Lubbock,  Farrar, 
Birch,  and  Courtney,  who,  in  later  discussions,  have  been  dis- 
tinguished as  the  monometallists  of  the  commission;  and,  third, 
by  the  other  six,  or  the  bimetallists.  Briefly  stated,  the  con- 
clusion was  unanimous  that  bimetallism  had,  in  the  two  hun- 
dred years  ending  in  1873,  preserved  the  ratio  between  silver 

i  That  part  of  the  report  signed  by  the  whole  commission  con- 
tains the  following: 

"  Looking  to  the  vast  changes  which  occurred  prior  to  1873  in  the 
relative  production  of  the  two  metals  without  any  corresponding 
disturbance  in  their  market  value,  it  appears  difficult  to  us  to  resist 
the  conclusion  that  some  influence  was  then  at  work  tending  to 
steady  the  price  of  silver,  and  to  keep  the  ratio  which  it  bore  to  gold 
approximately  stable. 

"  These  considerations  seem  to  suggest  the  existence  of  some 
steadying  influence  in  former  periods,  which  has  now  been  removed, 
and  which  has  left  the  silver  market  subject  to  the  free  influence  of 
causes  the  full  effect  of  which  was  previously  kept  in  check. 

"  Now,  undoubtedly,  the  date  which  forms  the  dividing  line 
between  an  epoch  of  approximate  fixity  in  the  relative  value  of 
gold  and  silver  and  one  of  marked  instability  is  the  year  when  the 
bimetallic  system  which  had  previously  been  in  force  in  the  Latin 
Union  ceased  to  be  in  full  operation;  and  we  are  irresistibly  led  to 
the  conclusion  that  the  operation  of  that  system,  established  as  it 
was  in  countries  the  population  and  commerce  of  which  were  con- 
siderable, exerted  a  material  influence  upon  the  relative  value  of 
the  two  metals.  So  long  as  that  system  was  in  force,  we  think  that, 
notwithstanding  the  changes  in  the  production  and  use  of  the  pre- 
cious metals,  it  kept  the  market  price  of  silver  approximately  steady 

nt  the  ratio  fixed  by  law  between  them,  namely,  15.50  to  1 

Nor  does  it  appear  to  us  a  priori  unreasonable  to  suppose  that  the 
existence  in  the  Latin  Union  of  a  bimetallic  system  with  a  ratio  of 
15.50  to  1  fixed  between  the  two  metals  should  have  been  capable  of 
keeping  the  market  price  of  silver  steady  at  approximately  that 
ratio. 

"  The  view  that  it  could  only  affect  the  market  price  to  the  extent 
to  which  there  was  a  demand  for  it  for  currency  purposes  in  the 
Latin  Union,  or  to  which  it  was  actually  taken  to  the  mints  of 
those  countries,  is,  we  think,  fallacious." 


352  THE  STRUGGLE  FOR  GOLD 

and  gold,  so  that  it  did  not  vary  more  than  3  per  cent,  above  or 
3  per  cent,  below  the  fixed  ratio  of  15.50  to  1.  The  six  mono- 
metallists  favored  bimetallism  for  every  country  except  their 
own,  and  recommended  that,  to  facilitate  this  object,  the  Bank 
of  England  should  hold  one-fifth  of  its  specie  in  silver  as  per- 
mitted by  the  Bank  Charter  Act  of  1844.1  Sir  John  Lubbock 
and  Mr.  Birch,  however,  appended  a  note  expressing  a  doubt 
whether  the  ratio  could  be  permanently  maintained.  The  bi- 
metallists  recited  the  familiar  arguments  for  the  effectiveness 
of  the  general  adoption  of  the  double  standard. 

Although  a  report  of  six  celebrated  Englishmen  appointed 
by  the  government,  distinctly  and  unequivocally  favoring  the 
adoption  of  bimetallism,  marks  an  epoch  in  the  history  of  this 
latter-day  controversy,  and  rendered  it  possible  for  others  to 
profess  the  doctrine  and  still  hold  their  respectability,  it  cannot 
be  said  that  it  brought  England  any  nearer  to  a  bimetallic 
agreement  than  she  formerly  was.  There  was  nothing  re- 
markable in  the  admissions  of  the  monometallic  half  of  the 
commission,  for  the  English  delegates  to  the  conference  of 
1881  had  freely  admitted,  even  argued, that  France, the  United 
States,  and  Austria,  and  what  other  countries  they  could 
gather  up,  would  be  able  to  maintain  a  stable  ratio;  they  ad- 
mitted all  this  in  the  hope  that  those  countries  would  make  the 


'Among  the  statements  made  by  the  monometallic  group  were 
these: 

"  We  think  that  in  any  conditions  fairly  to  be  contemplated  in  the 
future,  so  far  as  we  can  forecast  them  from  the  experience  of  the 
past,  a  stable  ratio  might  be  maintained  if  the  nations  we  have  al- 
luded to  (England,  Germany,  the  United  States,  and  the  Latin  Union) 
were  to  accept  and  strictly  adhere  to  bimetallism  at  the  suggested 
ratio  [about  the  market  ratio] 

"  In  our  opinion  it  might  be  worth  while  to  meet  the  great  com- 
mercial nations  on  any  proposal  which  would  lead  to  a  more  extended 
use  of  silver,  and  so  tend  to  prevent  and  apprehend  further  fall  in  the 
value  of  that  metal  and  to  keep  its  relation  to  gold  more  stable.  .  .  . 
Though  unable  to  recommend  the  adoption  of  what  is  commonly 
known  as  bimetallism,  we  desire  it  to  be  understood  that  we  are 
quite  alive  to  the  imperfections  of  standards  of  value,  which  not 
only  fluctuate,  but  fluctuate  independently  of  each  other." 


MEANING  OF  THE  COMMISSION'S  REPORT  353 

effort  and  so  relieve  England  of  the  embarrassments  caused  by 
the  scarcity  of  gold  and  the  continued  depreciation  of  silver. 
The  monometallists  practically  took  that  ground.  Denying 
that  bimetallism  could  be  adopted  by  Great  Britain,  they  un- 
dertook to  prove  that  it  was  practicable  for  other  nations,  and 
they  suggested  that  the  government  might  meet  other  govern- 
ments to  consider  the  question  of  "  the  larger  use  of  silver." 
The  suggestion  that  a  part  of  the  reserves  of  the  bank  be  kept  in 
silver  was  exactly  what  the  government  had  as  a  last  resort  pro- 
posed to  the  conference  of  1881,  on  the  condition  that  certain 
other  states  should  adopt  free  silver  coinage. 

Looking  at  the  report  of  the  commission  from  its  proper 
place  in  the  history  of  the  controversy,  therefore,  the  most 
that  can  be  said  of  it,  from  the  bimetallic  standpoint,  is  that 
it  furnished  evidence  of  a  general  desire  to  provide  a  larger  use 
of  silver  in  the  money  of  the  world,  and  of  a  growing  senti- 
ment among  leading  men  that  international  bimetallism,  with 
England  included,  was  the  only  policy  promising  to  obviate  the 
evils  which  all,  or  nearly  all,  admitted.  But  it  also  showed  a 
purpose  of  the  government  to  still  adhere  to  the  gold  standard 
in  the  expectation  that  France  and  the  United  States,  with 
their  great  stocks  of  silver  money,  would  before  long  be  ab- 
solutely compelled  to  take  steps  to  enhance  the  value  of  the 
metal,  whether  England  co-operated  or  not.  Very  few  in 
England  were  at  this  time  prepared  to  think  that  it  would  be 
safe  for  India  to  adopt  the  gold  standard,  or  that  it  would  be 
possible,  without  producing  a  crisis  at  home,  when  the  Bank 
of  England  was  with  so  much  difficulty  maintaining  an  ade- 
quate stock  of  bullion. 

It  is  not  an  unsafe  supposition  that  if  at  this  time  the 
United  States  had  raised  its  duties  on  European  imports  in- 
stead of  threatening  to  reduce  them,  and  had  discontinued  the 
coinage  of  silver  instead  of  threatening  constantly  to  increase 

it,  the  disturbance  in  English  opinion  would  have  been  suffi- 
23 


354 


THE  STRUGGLE  FOR  GOLD 


cient  to  have  given  the  growing  bimetallists  the  ascendency,  or, 
at  least,  sufficient  strength  to  have  brought  the  government 
into  an  attitude  distinctly  favorable  to  a  practical  international 
agreement.  The  United  States  could  have  well  afforded,  for  the 
sake  of  this  object,  to  impose  a  tax  which  the  consumers  did 
not  feel  so  long  as  they  were  employed  and  prosperous. 

One  day  in  March,  1888,  the  gold  reserve  in  the  United 
States  Treasury  stood  at  $218,818,253,  the  highest  point  it  has 
ever  reached.  "  The  heavy  movement  of  gold  from  the  United 
States,"  said  Director  Leech  of  the  Mint,  in  his  report  in  No- 
vember, 1889,  "  which  commenced  in  May,  1888,  and  which 
has  continued,  with  some  interruptions,  up  to  the  present  time, 
has  created  a  profound  stir  in  the  American  commercial  world 
and  excited  some  apprehensions  of  a  serious  drain  upon  the 
gold  stock  of  the  United  States,  as  this  is  the  first  loss  of  gold 
of  any  magnitude  since  the  resumption  of  specie  payments  in 
this  country."  A  few  figures  are  instructive.  The  following- 
shows  approximately  the  excess  of  imports  or  exports  of  gold, 
reported  in  six  different  countries  for  the  years  1881-92,  in 
millions  of  dollars : 


United 
States. 

England. 

France. 

Germany. 

Austria. 

Russia. 

Imp. 

Exp. 

Imp. 

Exp. 

Imp. 

Exp. 

Imp. 

Exp. 

Imp. 

Exp. 

Imp. 

Exp. 

1881... 
1882.  .  . 
1883.  .  . 
1884.  .  .  . 
1885.  .  .  . 
1886... 
1887.... 
1888.... 

97.5 
1.8 
6.1 

18.2 

33.2 
95  5 

'l8.2 
'22.2 

ii.'i 

3.2 

"7.0 

"S.O 

41 

27.0 

"e.'i 

"2.0 

2.0 
17.6 

"8.7 
8.2 
12.1 

'13.5 

'si's 

176 

'  '4.2 
5.6 
9.1 
80 

7.5 
2.5 
5.0 
3.4 

8.4 
6.4 
5.4 
3.3 

1.8 
2.7 
1.8 
60 

.... 

.  .  •  .  . 

47.5 
49.4 
12.5 
2.0 
2.1 
9.1 
12.8 
10.8 
11.3 
.8 

1889.... 
1890... 
1891.... 
1892.... 

1881-88. 
1889-92. 

49.6 
4.3 
68.1 
.5 

16.8 
45.0 
29.8 

28.2 



40.1 

'24.0 
53.5 

'25.6 

3.6 
15.6 
24.9 
6.7 

6.4 
17.2 
13.1 



'55.3 
89.3 

182.3 
182.3 

162.9 

40.4 
122.5 

148.5 

28.7 
119.8 

35.1 
35.1 

166.2 

48.6 
117.6 

88.5 

62.9 
25.6 

77.7 

26.9 

50.8 

18.4 
18.4 

72.5 

35.8 
36.7 



144.6 

158.3 

146.2 
12.1 

144.6 

CONDITIONS  OF  CIRCULATION  IN  THE  UNITED  STATES 


355 


Analyzing  these  results  it  is  observed  that  the  net  gain  or 
loss  in  the  respective  countries  for  the  two  periods  was: 


1881-88. 

Gain. 

United  States,  141.9  England, 
Germany,  8.5  France, 

Austria,  35.8  Russia,     146.2 


1889-92. 

Loss.  Gain.  Lose. 

6.4    England,  119.8  United  States,  122.5 
14.3    France,      92.0 
Germany,  50.8 
Austria,     36.7 
Russia,     132.5 


166.9 


431.8 


122.5 


What  was  the  cause  of  this  remarkable  movement  of  gold 
beginning  in  1888,  so  different  from  that  predicted  by  Mr. 
Atkinson  in  1886?  It  is  important  to  observe  a  few  facts,  first, 
as  to  the  circulation  as  given  in  the  reports  of  the  Treasury  for 
the  fiscal  years  ending  June  30,  1881,  1885,  1888,  and  1892. 


1  Money  in  treasury, 
1  Money  in  circulation,  . 

Total  money  per  capita, 

Money  in  circulation  per  capita, 

1  Net  gold  reserve  in  the  Treasury, 
1  United  States  notes  in  circulation, 
1  Amount  uncovered, 

1  Silver  dollars  and  bullion  in  Treasury, 
1  Their  gold  value  (average  price  silver), 
1  Depreciation, 

1 3  Silver  dollars  in  circulation,  . 
1  Their  gold  value, 
1  Depreciation, 
1  Total  depreciation  of  all  silver, 

Proportion  of  gold  to  silver  money,    4.7  to  1    2.9  to  1    2.5  to  1    1.5  to  1 


1881. 

1885. 

1888. 

1892. 

.  292.3 

525 

690.7 

771.2 

.1,114.2 

1,292.5 

1,372.1 

1,601.2 

.  $27.41 

$32.37 

$34.39 

$36.11 

.   21.71 

23.02 

22.88 

24.50 

157.5 

134 

214.2 

114.6 

.  316.4 

311.6 

293.3 

309.5 

.  158.9 

177.6 

79.1 

194.9 

y,  65.8 

169.4 

254.5 

433.8 

:r),  58 

142.6 

187 

311.6 

7.8 

26.8 

77.5 

122.2 

29.3 

39 

55.5 

56.8 

.   25.7 

31.8 

40.2 

37.4 

3.6 

7.2 

15.3 

19.4 

.   11.4 

34 

02.8 

141.6 

1  Funded  debt,  . 

1  Annual  interest  charge, 


.1,639.5     1,196.1 
75  47 


950.5 
38 


585 

22.8 


1  In  millions  of  dollars. 

3  The  depreciation  of  the  silver  certificates  is  not  included  here,  for  it 
has  been  calculated  on  the  silver  dollars  in  the  Treasury  which  the  certifi- 
cates merely  represented.  By  depreciation,  it  is,  of  course,  meant  the  loss 
in  intrinsic  value.  There  was  no  change  in  the  exchangeable  value. 


Were  gold  exports  due  to  the  overloading  of  the  currency 
with  silver — that  is,  did  the  camel's  back,  which  for  ten  years 


356  THE  STRUGGLE  FOR  GOLD 

had  showed  no  signs  of  weakness,  begin  to  give  way?  The  op- 
ponents of  silver  have  commonly  attributed  it  to  this  cause, 
asserting  that,  the  currency  having  become  redundant,  the 
cheaper  silver  drove  out  the  gold,  and  also  that  the  same  re- 
dundancy frightened  foreign  investors  and  induced  them  to 
send  our  securities  home.  But  nowhere  are  hasty  conclusions 
so  unsafe  as  in  the  regions  of  finance,  where  amid  so  many  in- 
sidious influences  satisfactory  conclusions  escape  even  the 
closest  and  most  impartial  study. 

It  is  difficult  to  discover  in  the  situation  indicated  by  the 
facts  set  forth  in  the  above  table  any  cause  for  a  sudden  be- 
ginning of  an  unusual  export  movement  of  gold.  There  was 
certainly  no  reason  for  timidity  on  the  part  of  the  holders  of 
our  securities,  and  there  is  little  to  show  that  the  weight  of  sil- 
ver was  beginning  to  break  the  back  of  a  currency  which  had 
been  in  constant  demand.  It  appears  that  the  circulation  per 
capita  was  but  slightly  larger  than  in  1881 ;  that  it  was  less  than 
in  1885;  that  the  gold  reserve  was  larger  than  in  any  previous 
year;  that  there  was  free  gold  enough  in  the  Treasury  to 
redeem  all  but  $80,000,000  of  the  greenbacks;  that  even  after 
deducting  the  total  amount  that  the  silver  dollars  had  lost 
in  their  intrinsic  value  from  the  gold  reserve  it  still  remained 
nearly  as  large  proportionally  as  in  1881;  that,  leaving  the 
value  of  the  silver  in  the  coinage  entirely  out  of  consideration, 
the  reserve  was  over  32  per  cent,  of  all  the  silver  and  paper 
money  in  circulation  exclusive  of  the  national  bank  notes;  that 
the  proportion  of  gold  to  silver  in  the  circulation  was  2.5  to  1, 
and  nearly  as  great  as  in  1885;  and  that  the  situation  was  in 
every  way  better  than  in  1892,  a  year  in  which  the  imports  of 
gold  nearly  balanced  the  exports.  Nor  was  there  anything  in 
the  situation  to  cause  alarm  in  the  commercial  and  financial 
circles  at  home.  The  new  coinage  of  the  yellow  metal  for 
the  four  years  1888-92  equalled  the  excess  of  exports  over 
imports,  so  that  the  country  lost  nothing  that  its  production 


CHANGES  IN  THE  BALANCE  OP  TRADE  357 

did  not  make  good.  There  is  no  evidence  of  any  marked  sell- 
ing movement  of  our  securities  until  some  time  after  1888, 
and  that  movement  was  brought  about  by  no  distrust  of  the 
financial  soundness  of  the  country,  but  by  the  necessity  of  set- 
tling losses  on  investments  in  South  American  and  other  securi- 
ties, as  will  be  noticed  later. 

A  clearer  cause  for  the  beginning  of  the  export  movement 
is  revealed  by  an  examination  of  the  trade  balances  for  the 
period.  In  the  year  ending  June  30,  1888,  the  balance  was 
against  us  for  the  first  time  in  twelve  years.  The  average  bal- 
ance in  our  favor  from  June  30,  1880,  to  June  30,  1887,  was 
$109,000,000.  Between  May,  1888,  and  September,  1889, 
the  balance  against  us  reached  $47,825,359.  Including  the 
trade  of  the  year  1892,  when  the  balance  turned  in  our  favor 
to  the  extent  of  $215,000,000,  the  average  excess  of  exports  of 
merchandise  and  silver  over  their  importations  for  six  years 
from  June  30,  1887,  was  $68,000,000  only.  At  first  sight 
this  might  seem  to  account  for  the  gold  exportations,  for  it  will 
be  observed  that,  deducting  from  the  average  excess  of  exports 
of  merchandise  and  silver  for  the  first  period  (1881-87)  the 
annual  excess  of  imports  of  gold,  the  result  is  an  unac- 
counted-for overpayment  abroad  of  $88,900,000;  and,  adding 
to  the  excess  of  exports  of  merchandise  and  silver  for  the  latter 
period  (1888-92)  the  average  excess  of  gold  exports,  the  appa- 
rent annual  overpayment  is  $87,800,000,  or  about  that  of  the 
first  period.  This  overpayment  is  commonly  attributed  not 
simply  to  payment  on  securities  and  investments  held  abroad, 
but  to  money  carried  out  by  tourists  and  charges  for  freight  in 
foreign  bottoms,  operations  upon  which  no  very  definite  calcu- 
lations can  be  made. 

But  it  is  unsafe  to  rely  implicitly  upon  the  reported  bal- 
ances in  merchandise  when  drawing  conclusions.  In  a  general 
way  an  apparently  unfavorable  balance  affects  the  rate  of  ex- 
change, but  no  fixed  rules  can  be  laid  down.  The  real  balance 

O     / 


358  THE  STRUGGLE  FOR  GOLD 

in  these  international  operations  is  always  undetermined,  and 
at  times,  undoubtedly,  differs  widely  from  the  apparent  bal- 
ance; and  the  rate  of  exchange  affects  imports  and  exports  of 
merchandise  quite  as  much  as  it  is  affected  by  them.  A  rate 
that  calls  for  the  export  of  specie  naturally  stimulates  the 
export  of  merchandise  by  adding  to  the  prospective  profit  of 
the  export  merchant,  and  conversely  discourages  imports  of 
merchandise.1  We  should  look,  therefore,  for  a  decline  in 
imports  in  the  years  1888-92,  and  an  increase  in  exports.  As 
a  matter  of  fact,  the  value  of  our  imports  increased  more  than 
the  value  of  our  exports.  The  value  of  our  average  annual 
exports  of  merchandise  during  1888-92  wfcs  but  $77,000,000 
greater  than  during  1881-87,  while  the  value  of  the  average 
annual  imports  was  $120,000,000  greater  in  the  latter  period 
than  in  the  former.  If  the  year  1892,  when  exports  reached 
an  unprecedented  figure,  is  omitted  from  the  latter  period,  the 
average  annual  value  of  our  exports  of  merchandise  was  only 
$30,000,000  greater  than  during  1881-87;  that  of  imports 
$110,000,000  greater. 

The  real  explanation  of  this  anomalous  economic  condition 
seems  to  be  that  the  sudden  export  movement  of  gold  was  not 
called  for  by  the  commercial  conditions  prevailing  at  the  time. 
The  rate  of  exchange  indicated  this.  The  movement  did  not 
have  its  origin  in  any  distrust  of  our  financial  condition,  nor 
in  a  redundancy  of  silver  currency,  nor  even  in  a  decline  in  our 
favorable  balance  of  trade,  which,  however,  aided  it.  It  orig- 
inated in  another  remarkable  demand  for  gold  in  Europe, 
which  was  compelled  to  have  it,  even  if  it  paid  a  high  price. 
The  shipments  of  gold  in  1888  and  1889  were  mostly  made 

i  After  the  war  of  1870--71  the  exports  of  France  increased  enor- 
mously for  several  years,  because  the  large  payments  made  to  Ger- 
many caused  foreign  paper  to  rise  considerably  above  par,  and  the 
profits  that  exporters  obtained  from  the  paper  they  drew  on  foreign 
debtors  were  such  that  they  could  content  themselves  with  an  ex- 
tremely small  profit  on  the  price  of  their  goods,  and  could,  if  neces- 
sary, sell  them  at  an  apparent  loss. 


EUROPE'S  PRESSING  DEMAND  FOR  GOLD  859 

when  the  rate  of  exchange  was  below  the  figure  which  enabled 
shipments  to  be  made  in  London  without  loss.  The  Director  of 
the  Mint  said  in  his  report  for  1891,  after  a  tabular  statement  of 
the  gold  exports:  "An  examination  of  the  above  table  discloses 
the  very  singular  fact  that  of  this  large  amount  ($70,000,000) 
all  but  $9,300,000  was  shipped  when  the  rate  of  sterling  ex- 
change was  below  the  point  (about  $4.886)  at  which  gold 
shipments  can  be  made  without  loss.  The  movement,  there- 
fore, must  have  been  artificially  stimulated  by  banks  and 
bankers  in  Europe  paying  a  premium  on  gold,  or  making  dis- 
counts to  bill-drawers  for  cash  remittances."  The  price  of 
exchange  in  New  York  would  necessarily  have  been  nearly 
$4.89  to  make  shipments  to  London  profitable  for  sale  to  the 
Bank  of  England,  for  the  margin  of  1£  pence  per  ounce  at  the 
bank  between  the  buying  and  selling  price  would  cause  own- 
ers of  bullion  in  London  to  accept  any  price  above  77s.  9d.  for 
shipment  this  way.  Yet  large  amounts  of  gold  were  sent  to 
London  when  the  rate  of  exchange  was  below  $4.88. 

Why  this  demand  for  gold?  The  Bank  of  France  began  in 
1888,  in  a  determined  way,  to  increase  its  gold  stock,  and  in 
less  than  nine  months  $63,790,000  was  added  to  it.  In  the  fall 
of  1889  its  stock  of  gold  was  the  largest  it  had  ever  held.  The 
Bank  of  Germany  was  trying  to  accomplish  the  same  thing. 
Both  institutions  began  to  credit  banking-houses  in  Paris 
and  Berlin  with  the  value  of  the  bullion  shipped  to  them  from 
New  York  at  the  date  of  shipment,  thus  lessening  the  cost  of 
the  movement  by  the  interest  on  the  amount  during  the  whole 
period  of  transit.  This  was  done  to  attract  gold  from  the  im- 
mense stock  in  America.  As  during  1888  and  1889  exchange 
between  London  and  Paris  was  in  favor  of  the  latter,  and  the 
reserve  in  the  Bank  of  England  was  too  low  to  permit  of  loss 
without  serious  consequences,  England  imported  our  gold  at  a 
loss  to  pay  its  debts  in  France,  not  being  able  to  pay  them  from 
its  own  stock  of  gold.  A  little  later  came  the  Baring  crisis, 


360  THE  STRUGGLE  FOR  GOLD 

and  the  consequent  losses  incurred  by  English  capitalists  in 
South  American  countries  compelled  the  Bank  of  England  to 
borrow  a  large  amount  from  the  Bank  of  France  to  prevent  a 
serious  disaster.  Soon  after  Austria  demanded  a  supply  of 
yellow  metal  for  the  adoption  of  the  gold  standard ;  Roumania 
did  the  same  on  a  smaller  scale;  Russia,  which  for  years  had 
furnished  the  world  with  a  large  amount  of  gold,  suddenly 
began  to  absorb  its  own  product  and  actually  import  vast 
stores;  and  India  took  larger  quantities,  which  never  returned. 

During  this  pressing  demand  for  the  money  metal  of  the 
world  there  was  no  stock  so  easy  to  draw  from  as  that  of  the 
United  States.  While  the  great  banks  of  Europe  were  using 
various  devices  to  protect  their  stock  and  to  attract  additions  to 
it,  the  gold  stock  of  the  United  States  Treasury  was  open  to  all 
comers  on  easy  terms.  There  was  no  conveniently  shifting 
discount  rate  as  in  England  and  Germany,  and  no  premium 
charge  as  in  France.  The  Treasury  did  not  pay  a  premium  on 
foreign  coin  as  did  the  Bank  of  England  on  American  dol- 
lars, and  offered  importers  no  inducements  in  the  way  of  inter- 
est on  shipments  while  in  transit,  though  late  in  1891  the 
Treasury  did  pass  an  order  allowing  depositors  of  foreign' coin 
and  bullion  approximate  spot  cash  value  for  it  as  soon  as  re- 
ceived at  the  counter  of  the  assay  office,  thus  saving  interest 
on  the  value  of  the  deposit  pending  melting  and  assay.  But 
this  could  not  compete  against  the  far  more  generous  terms  of 
foreign  banks.  Europe  simply  demanded  gold,  and  could  get 
it  nowhere  else  so  easily  as  here,  and  it  took  it,  paying  the  loss 
on  shipments  necessitated  by  the  rate  of  exchange. 

The  decline  in  American  exports  may  have  been  due  to 
some  extent  to  the  fact  that  the  rate  of  exchange  offered  no  ad- 
ditional profit  to  the  exporter,  to  some  extent  also  to  the  con- 
tinued decline  in  prices,  but  more  to  the  falling  off  of  the 
ability  of  the  consuming  classes  of  Europe  to  consume.  The 
long  depression  in  Europe,  and  especially  in  England,  had  re- 


UNSATISFACTORY  SITUATION  IN  ENGLAND  361 

duced  the  mass  of  the  people  to  a  condition  requiring  the  strict- 
est economy  of  expenditures  even  for  the  necessities  of  life. 
Profits  had  been  lost  and  wages  cut.  The  spectre  of  socialistic 
discontent  grew  larger  and  more  distinct.  The  United  States 
prospered,  but  still  suffered  a  considerable  loss  through  this 
decreased  demand  for  their  great  staples,  the  prices  of  which 
steadily  fell.  It  makes  no  difference  whether  the  phenomenon, 
is  called  over-production  or  under-consumption ;  but  it  makes 
a  vast  difference  to  a  productive  people  if  the  power  to  consume 
does  not  go  hand  in  hand  with  the  power  to  produce. 

England  was  troubled  with  the  very  condition  of  things 
which  she  had  feared  in  1881,  and  which  her  delegates  had 
sought  to  have  others  prevent.  Austria  was  preparing  to  adopt 
the  gold  standard,  and  Russia's  gold  fund  had  a  military  aspect 
unpleasant  to  contemplate.  Moreover,  her  own  India  was  not 
simply  usurping  the  Eastern  markets  with  some  classes  of 
manufactures,  but  was  absorbing  an  increasing  amount  of 
gold  each  year,  intercepting  some  that  would  have  otherwise 
gone  to  London,  and  also  drawing  it  from  London,  where  it 
could  least  be  spared.  During  the  ten  years  1880  to  1890  that 
colony  imported  £36,000,000  of  the  metal,  and  in  1890  the 
importations  rose  to  unprecedented  figures.  The  opinion  that 
she  might  as  well  adopt  the  gold  standard  began  to  be  ex- 
pressed, for  she  would  require  no  more  gold  than  she  was 
already  taking,  and  which,  immediately  upon  arrival,  went  into 
hiding-places,  where  it  was  of  no  further  use  to  commerce. 

On  account  of  the  peculiar  condition  of  her  trade,  England 
was  finding  it  next  to  impossible  to  accumulate  the  precious 
metal  for  which  so  many  others  were  grasping.  In  1881  the 
reserve  of  the  bank  was  £41,000,000;  in  1889  it  was  only 
£19,000,000.  The  proportion  of  cash  to  liabilities  had  fallen 
in  ten  years  about  20  per  cent.  The  bank  had  changed  its 
rate  of  discount  nearly  a  hundred  times,  the  variations  amount- 
ing to  4  per  cent.  Some  advantages  accrued  to  the  holders  of 


862  THE  STRUGGLE  FOR  GOLD 

interest  notes,  but  this  only  occasioned  a  discontent  among 
the  producers  which  was  forcibly  revealed  in  the  parliamentary 
debates  in  the  spring  of  1890,  when  the  question  of  the  adop- 
tion of  bimetallism  was  submitted  and  secured  the  votes  of 
one-third  of  the  Commons. 

A  former  president  of  the  Liverpool  Chamber  of  Com- 
merce submitted  140  petitions  with  60,000  signatures  asking 
for  the  re-establishment  of  the  bimetallic  system.  He  described 
the  losses  which  labor  was  suffering  by  the  appreciation  of 
gold,  and  said  it  wyas  a  tax  which  the  drones  of  society  levied 
on  the  working  bees.  The  welfare  of  society  could  not  be 
promoted  if  the  income  of  the  idle  non-producing  class  was 
raised  at  the  expense  of  the  toiling  masses,  and  he  held  that 
one-half  of  this  new  burden  was  derived  from  the  demonetiza- 
tion of  silver.  He  denounced  the  attempt  to  depreciate  silver 
as  a  huge  fraud  on  civilization,  and  argued  that  the  contraction 
of  the  currency  was  merely  in  the  interest  of  the  rich,  and 
was  opposed  to  the  interest  of  the  whole  nation.  Sir  William 
Houldsworth,  a  Manchester  cotton-spinner,  and  one  of  the 
members  of  the  Gold  and  Silver  Commission,  declared  that  it 
was  incorrect  to  say  that  the  wage  worker  found  indemnifica- 
tion in  the  fall  of  prices  of  the  necessaries  of  life  for  the  loss  in 
work  or  wages,  and  if  the  equalization  took  place  at  all,  it  must 
do  so  very  late.  For  these  reasons  he  said  the  wage  workers 
were  earnestly  in  favor  of  the  bimetallic  petition.  A  Cheshire 
cotton-spinner  lamented  the  pitiable  condition  of  all  debtors 
of  the  country  who  had  assumed  burdens  under  entirely  differ- 
ent circumstances,  and  said  that  the  producers  were  the  vic- 
tims of  monetary  vivisection.  The  monometallists  replied  that 
the  participation  of  England  in  a  bimetallic  Congress  would 
mean  that  England,  the  great  creditor  of  the  world,  was  to 
invite  the  debtor  nations  to  deliberate  whether  the  debts  con- 
tracted in  gold  since  1816  might,  be  liquidated  in  depreciated 
silver.  A  union  would  last  just  so  long  as  England  was  willing 


BALFOUR  AND  G08CHEN  ON  BIMETALLISM  363 

to  remain  in  it,  to  be  shorn  like  a  gentle  sheep  by  the  debtor  na» 
tions.  This  opinion  was  put  forth  by  the  representatives  of  the 
government,  but  the  Secretary  for  Ireland,  Arthur  Balfour, 
separated  from  his  associates  and  declared  that  he  subscribed  to 
"  the  bimetallic  heresy."  He  maintained  that  it  was  wrong  to 
imagine  that  all  the  inconveniences  since  1874  had  sprung 
from  a  divergence  of  the  values  of  the  two  metals,  but  that  the 
divergence  had  had  a  large  share  in  them,  that  it  would  be 
better  for  the  country  to  suffer  from  inflation  than  from  con- 
traction, and  that  an  international  agreement  was  possible 
and  desirable,  but  could  not  perhaps  be  carried  out  against  the 
prevailing  opinion  of  mercantile  circles.  "  But,"  he  asked, 
"  if  to-morrow  America  were  to  decide  to  use  no  more  silver, 
but  place  itself  entirely  on  a  gold  basis,  where  would  the 
prices  be?" 

In  a  public  meeting  at  about  the  same  time  Goschen  ex- 
pressed his  shame  at  the  sensitiveness  of  the  market  to  a  de- 
mand for  gold  from  Brazil  or  other  small  countries ;  the  scarcity 
of  a  standard  metal  in  England  was  humiliating;  and  he  said 
of  bimetallism  that  he  considered  it  a  very  serious  demand 
for  a  change  which  bimetallists  deplore  and  attempt  to  remedy. 
"  I  fully  appreciate  the  importance  of  the  question.  I  feel  it 
is  almost  impossible  to  exaggerate  its  importance." 

During  the  summer  of  1889,  and  in  connection  with  the 
Exposition  at  Paris,  the  French  government  organized  several 
conferences,  and  one  of  them  was  on  money.  The  commission- 
ers of  the  various  governments  to  the  fair  were  asked  to  ap- 
point representatives,  and  a  few  did  so,  but  no  one  appeared 
for  the  United  States.  It  was  a  sort  of  oratorical  tournament 
participated  in  by  unofficial  representatives,  and  lasted  but  two 
days.  Thus  it  could  accomplish  nothing,  and  sought  to  accom- 
plish nothing,  though  the  speeches  showed  that,  in  the  per- 
sonal opinion  of  those  present,  the  monetary  situation  was  in 
desperate  need  of  a  remedy. 


364  THE  STRUGGLE  FOR  GOLD 

The  feeling  in  the  Old  World,  and  especially  in  England, 
on  which  everything  depended,  was  such  that  if  the  United 
States  had  suspended  silver  coinage,  placed  themselves  entirely 
on  a  gold  basis,  but  announced  their  attitude  as  one  of  readiness 
to  confer  with  Europe  when  Europe  discovered  that  she  was 
ready,  the  prospects  would  have  been  excellent  for  the  accom- 
plishment of  that  which  this  country  had  twice  unsuccessfully 
sought.  But,  as  usual,  the  occasion  was  taken  for  another  out- 
burst of  free-silver  enthusiasm.  By  a  thorough  organization  of 
the  silver  forces,  and  by  the  admission  of  more  territories  to 
statehood,  the  issue  had  assumed  great  importance  in  politics, 
and  after  Cleveland's  defeat  the  Democrats  rallied  to  free  sil- 
ver with  a  vim  born  of  the  feeling  that  they  had  no  administra- 
tion of  their  own  to  hurt,  and  that  they  might  hurt  "  the  other 
fellows  "  by  capturing  the  silver  states.  The  new  administra- 
tion was  far  from  being  unfriendly  to  silver,  and  Republican 
managers  generally  considered  that  something  should  be  done, 
for  a  majority  of  the  new  Senate  was  plainly  in  favor  of  free 
coinage.  It  was  a  political  necessity  to  propose  something, 
for  otherwise  a  free  silver  bill  might  go  to  the  President,  and 
his  party,  while  opposing  the  free  coinage  of  silver  on  principle, 
dreaded  the  effects  of  a  veto  of  a  free-coinage  measure. 

Accordingly,  Secretary  Windom  presented  in  December, 
1889,  his  plan  for  silver  purchases.  He  began  with  the  premise 
that  the  continued  coinage  of  silver  dollars  at  a  constantly  in- 
creasing monthly  quota  was  "a  disturbing  element  in  the  other- 
wise excellent  financial  condition  of  the  country,  and  a  positive 
hinderance  to  any  international  agreement  for  free  coinage," 
but  he  said  the  policy  of  stopping  the  purchase  of  silver  and 
throwing  an  additional  thirty  million  ounces  on  the  market, 
while  it  might  be  the  shortest  way  to  an  international  agree- 
ment, would  probably  be  attended  by  financial  and  commercial 
disasters  at  home  and  abroad,  and  a  less  dangerous  solution 
should  be  sought.  He  pronounced  the  various  propositions 


SECRETARY  WINDOM'S  PLAN  OP  SILVER  PURCHASES  365 

which  had  been  made,  including  the  free  coinage  of  silver,  im- 
practicable, and  then  proposed  the  following  measure: 

"  Issue  treasury  notes  against  deposits  of  silver  bullion  at  the 
market  price  of  silver  when  deposited,  payable  on  demand  in  such 
quantities  of  silver  bullion  as  will  equal  in  value,  at  the  date  of 
presentation,  the  number  of  dollars  expressed  on  the  face  of  the 
notes  at  the  market  price  of  silver;  or  in  gold,  at  the  option  of  the 
government;  or  in  silver  dollars,  at  the  option  of  the  holder.  Repeal 
the  compulsory  feature  of  the  present  coinage  act." 

It  was,  in  brief,  a  proposition  to  open  the  mints  to  the  free 
deposit  of  silver,  the  market  value  of  the  same  (not  to  exceed 
$1  for  412.5  grains  of  standard  silver)  at  the  time  of  deposit 
to  be  paid  in  treasury  notes,  receivable  for  all  dues,  and  to  be 
counted  as  a  part  of  the  lawful  reserve  of  banks.  Among  the 
possible  advantages  of  the  measure,  he  suggested  that,  if  it 
proved  successful,  other  nations  might  find  it  in  their  interest 
to  adopt  it,  without  waiting  for  an  international  agreement, 
and,  should  concerted  action  be  deemed  desirable,  it  could  then 
be  more  easily  secured.  lie  did  not  consider  that  a  restriction 
of  the  amount  to  be  purchased  would  be  wise,  for  it  Avould  be 
felt  in  the  silver  market,  and  make  the  law  inconvenient  in  op- 
eration, but,  if  a  restriction  was  made,  it  should  be  to  the 
productions  of  the  mines  of  the  United  States. 

As  the  measure  was  finally  formulated,  however,  the  pur- 
chases were  to  be  limited  to  silver  produced  in  this  country, 
and  in  such  form  it  was  introduced  on  January  20,  1890.  A 
number  of  free  coinage  bills  were  also  put  in.  It  is  unneces- 
sary to  enter  into  the  remarkable  debates  on  the  silver  question 
in  this  Congress,  the  various  forms  the  measure  took,  and  the 
various  reports  that  were  made.  The  free-silver  men  fought 
desperately.  The  history  of  the  act  of  1873  was  again  raked 
up;  spurious  quotations  were  made  to  show  that  Ernest  Seyd 
came  to  this  country  to  bribe  Congress  to  adopt  the  gold 
standard,  and  attempts  were  made  to  support  the  charge  by 
affidavits.  It  was  one  of  those  Congressional  silver  bat- 
tles with  which  we,  in  the  United  States,  have  become  familiar. 


366  THE  STRUGGLE  FOR  GOLD 

As  it  passed  the  House  the  bill  contained  the  bullion  re- 
demption clause,  a  limitation  of  purchases  to  $4,500,000  worth 
monthly,  and  a  section  providing  for  free  coinage  when  silver 
reached  parity  with  gold  at  the  coming  ratio.  If  this  had 
passed,  it  might  have  quickly  resulted  in  free  coinage,  for  the 
silver  producers  could  have  held  back  their  product  till  parity 
was  reached,  and  then  felt  safe  to  let  it  go.  But  as  the  bill 
passed  the  Senate,  a  few  days  later,  by  a  vote  of  42  to  25,  it  was 
an  unlimited-coinage  measure  pure  and  unconditional,  owing 
to  the  adoption  of  an  amendment  which  stripped  it  of  every 
feature  of  Secretary  Windom's  plan,  and  made  the  coinage  of 
dollars  of  full  legal  tender  absolutely  free.  The  House  non- 
concurred  by  a  vote  of  135  to  152  —  a  narrow  escape  —  and 
it  went  to  a  conference  committee,  from  which  it  came  in 
much  the  same  shape  as  it  had  passed  the  House,  except  that 
instead  of  requiring  a  monthly  purchase  to  the  value  of  $4,- 
500,000,  it  called  for  the  purchase  of  4,500,000  ounces  a 
month.  It  was  finally  passed,  signed  July  14,  and  made  opera- 
tive August  13. 

Its  effect  on  the  price  of  silver  had  been  largely  anticipated 
before  its  passage,  the  quotation  having  been  in  March  as  low 
as  48f  d.,  from  which  it  jumped  to  48d.  in  April,  and  49d.  in 
June.  When  the  bill  became  law,  in  July,  silver  was  quoted  at 
50|,  and  when  it  went  into  effect  in  August  at  54£,  and  three 
weeks  later  at  54f ,  a  price  which  the  metal  had  not  touched 
since  March,  1878  —  over  twelve  years.  The  silver  men  were 
jubilant;  some  bimetallists  cited  it  as  proof  of  their  previous 
assertions  that  demonetization  alone  had  reduced  the  price 
of  the  metal,  and  financial  circles  were  generally  gratified  at  the 
apparently  favorable  workings  of  the  policy.  Bimetallists  in 
Europe  predicted  a  flattering  future  for  silver,  one  of  the  best 
authorities  in  monetary  statistics  estimating  that  the  world's 
use  of  silver  would  thenceforth  be  146,000,000  ounces  a  year, 
while  the  production  could  not  rise  above  130,000,000  ounces. 


THE  PRICE  OF  SILVER  AGAIN  DECLINES  367 

"  Where  is  the  balance  of  16,000,000  ounces  to  come  from?" 
asked  Ottomar  Haupt,  of  Austria.  "  Neither  will  Germany  sell 
any  more  of  her  silver  thalers  nor  Italy  her  demonetized  pias- 
ters. As  regards  the  other  countries,  none  will  move  in  the  sil- 
ver question.  The  American  mint  price  works  out  at  $1.29, 
equal  to  59rf.  Who  will  sell  with  such  a  prospect  before  him?" 

But  producers  and  speculators  had  been  holding  back  a 
quantity  of  silver  since  the  first  of  the  year  in  the  expectation 
of  higher  prices.  This  had  had  the  effect  of  stiffening  the 
price  prior  to  the  passage  of  the  act,  but  soon  afterwards, 
when  they  began  to  take  it  to  the  government,  the  price  began 
to  weaken.  By  November  it  was  quoted  as  low  as  45rf.  On 
a  falling  market  everybody  who  had  silver  sold.  Besides,  Rou- 
mania,  which  had  adopted  the  gold  standard  in  March,  with- 
drew 25,000,000  francs  of  silver  and  put  it  on  the  market. 
Considerable  foreign  silver  came  to  this  country;  indeed,  the 
situation  was  altogether  unprecedented.  The  imports  of  for- 
eign silver  into  the  United  States  from  May  1  to  November  1 
exceeded  the  exports  of  domestic  silver  by  some  $7,750,000, 
while  for  the  corresponding  period  of  the  year  before  the  ex- 
ports exceeded  the  imports  by  nearly  $8,000,000.  The  move- 
ment of  silver  from  San  Francisco  to  the  Orient,  which  had 
previously  averaged  about  $7,000,000  a  year,  stopped  entirely. 
The  effect  of  this  was  not  simply  to  produce  a  surplus  of  silver 
in  the  American  market,  and  so  decrease  the  price,  but  to 
further  decrease  our  trade  balance,  so  that  gold  had  to  take  the 
place  of  the  silver  usually  demanded  for  export.  Europe  was 
thus  enabled  to  secure  gold  from  us  at  a  little  less  expense. 

The  act  undoubtedly  afforded  some  little  relief  in  the  fall 
of  1890,  when  a  severe  stringency  prevailed  in  the  New  York 
money  market  attributed  to  the  influences  of  the  Baring  crisis; 
but  on  the  whole  our  circulation  did  not  increase.  Up  to  July 
1,  1891,  the  government  had  put  out  some  $50,000,000  in 
treasury  notes,  but  in  the  same  period  about  $65,000,000  of 


368  THE  STEUGGLE  FOR  GOLD 

gold  was  exported.  This  was  the  most  serious  loss  we  had  yet 
experienced,  but,  as  in  the  two  previous  years,  it  was  shipped 
mostly  when  the  rate  of  exchange  made  shipments  a  losing- 
operation.  The  heavy  losses  in  Europe  compelled  the  banks 
to  get  gold  at  any  price.  The  Bank  of  England  paid  a  pre- 
mium on  American  dollars,  and  raised  it  several  times.  The 
new  treasury  notes  affected  the  situation  only  as  extra  instru- 
ments for  drawing  gold  from  the  treasury.  It  would  have 
been  drawn  out  anyway. 

Speaking  of  this  period  towards  the  end  of  January,  1891, 
at  Leeds,  the  English  Chancellor  of  the  Exchequer  said : 

"  We  were  on  the  brink  of  a  crisis,  through  which  it  might  have 
been  difficult  for  the  soundest  to  pass  unscathed,  for  the  wealthiest 
to  have  escaped.  It  was  a  time  when  none  who  had  liabilities  or 
engagements  to  pay  could  say  how  they  would  pay  them,  if  a  con- 
dition of  things  were  to  continue  under  which  produce  could  not 
be  sold,  under  which  bills  could  not  be  discounted,  under  which 
there  appeared  an  absence  of  cash  sufficient  to  discharge  the  lia- 
bilities of  the  general  public.  That  was  the  position  at  home,  and 
I  will  tell  you  what  was  at  stake.  You  risked  the  deposition  of  Lou- 
don  as  the  banking  centre  of  the  universe;  you  risked  the  supremacy 
of  English  credit;  you  risked  the  transfer  of  the  business  of  this 
country  to  other  countries,  if  such  a  catastrophe  had  occurred  as  you 
were  on  the  eve  of  witnessing.  I  cannot  exaggerate  the  danger, 
the  immediate  danger,  to  which  this  country  was  exposed  at  that 
time.  You  escaped  from  a  catastrophe  which  would  have  affected 
every  town,  every  industry;  to  use  a  common  phrase,  you  have  es- 
caped by  the  skin  of  your  teeth." 

G  oschen's  theme  at  this  time,  as  it  had  been  for  some  years, 
was  the  scarcity  of  gold  for  monetary  purposes.  Speaking  as 
the  Chancellor  of  the  Exchequer,  his  words  had  a  more  marked 
effect,  and  financiers  began  to  consider  seriously  whether  Eng- 
land was  not  at  a  disadvantage  in  the  scramble  for  gold,  a  dis- 
advantage which  might  threaten  her  commercial  supremacy. 
Lidderdale,  who  was  Governor  of  the  bank  during  the  crisis, 
joined  the  ranks  of  the  bimetallists.  That  stanch  advocate  of 
monometallism,  the  Economist,  said,  in  speaking  of  the  efforts 
to  recuperate  in  1891:  "A  struggle  for  gold  lasted  from 
January  to  December,  as  the  bank  was  obliged  again  and  again 
to  make  a  strong  effort  to  induce  deposits,  but  found  it  impossi- 


ANOTHER  CONFERENCE  CONSIDERED  369 

ble  to  keep  them,  for  no  sooner  had  it  built  up  its  reserves  than 
the  market  prices  fell  and  a  new  overflow  began."  Goschen 
endeavored  to  devise  means  to  strengthen  the  reserves  of  the 
joint  stock  banks,  and  he  induced  them  to  make  more  frequent 
reports,  but  the  proportion  of  their  cash  to  reserves,  which  was 
only  12.9  per  cent,  at  the  end  of  1890,  had  risen  to  but  13.7 
by  the  end  of  1891.  To  help  out  the  Bank  of  England  he 
proposed  to  have  it  issue  one-pound  notes  to  exchange  for  a 
part  of  the  gold  in  the  currency,  and  he  made  other  proposi- 
tions for  means  to  provide  against  future  crises  of  the  kind.  An 
estimate  of  the  gold  in  England  made  in  1884  had  placed  the 
amount  at  £120,000,000;  Goschen  held  that  in  1891  there 
was  only  about  £70,000,000. 

The  continued  depreciation  of  silver,  notwithstanding  pur- 
chases under  the  act  of  1890  in  this  country,  was  a  great  dis- 
appointment to  the  administration,  and  aroused  the  silver  men 
to  fresh  agitation  of  unlimited  coinage  at  the  very  time  we 
were  negotiating  for  another  conference.  Secretary  Win- 
dom  hoped  for  a  change  for  the  better  when  the  sil- 
ver surplus  had  been  absorbed,  as  he  said  in  his  report, 
and  the  President  reminded  Congress  that  a  longer  trial  should 
be  allowed  the  measure.  But  as  it  might  prove  a  failure,  and 
as  an  election  was  coming  on  in  1892,  the  possibilities  of  an- 
other conference  were  seriously  considered.  It  seemed  to  be 
the  misfortune  of  the  United  States  to  always  turn  to  inter- 
national conferences  as  a  means  of  escape  from  free  coinage 
when  the  success  of  such  conferences  depended  upon  a  vigor- 
ous and  sincere  refusal  of  this  country  to  do  anything  for  silver 
till  Europe  should  act.  President  Harrison  said  in  his  message 
at  the  end  of  1890  that,  while  it  had  not  been  thought  best  to 
renew  formally  the  suggestion  of  another  conference,  care  had 
been  taken  to  observe  closely  any  change  in  the  situation 
abroad,  and  the  monetary  disturbances  there,  he  thought,  were 
not  unlikely  to  suggest  a  re-examination  of  the  subject.  He 
24 


370  THE  STRUGGLE  FOR  GOLD 

added :  "  Our  very  large  supply  of  gold  will,  if  not  lost  by  im- 
pulsive legislation  in  the  supposed  interest  of  silver,  give  us  a 
position  of  advantage  in  promoting  a  permanent  and  safe  inter- 
national agreement  for  the  free  use  of  silver  as  a  coin 
metal." 

As  early  as  the  month  of  April,  1891,  the  Treasury  De- 
partment began  an  investigation  to  ascertain  the  sentiment  of 
the  European  governments  as  to  a  conference.  England  was 
found  to  be  ready  for  a  meeting,  but  not  to  consider  the  free 
use  of  silver.  The  government  met  our  advances  with  that 
stereotyped  formula  which  had  been  a  regular  feature  of  pre- 
vious conferences,  that  the  acceptance  of  an  invitation  to  meet 
for  the  consideration  of  a  fixed  ratio  between  gold  and  silver 
might  give  rise  to  a  misunderstanding  by  implying  that  the 
English  government  had  some  doubt  as  to  the  maintenance  of 
the  monetary  system  which  had  been  in  force  since  1816.  The 
commercial  interests  of  England  and  her  colonies,  it  was  ad- 
mitted, made  the  fall  and  fluctuation  of  silver  a  matter  of  con- 
cern, and  it  therefore  asked  that  the  invitation  be,  if  possible, 
modified  so  as  to  call  merely  for  the  consideration  of  what 
measures,  if  any,  could  be  adopted  to  increase  the  use  of  silver 
as  currency.  As  such  an  increase  might,  of  course,  embrace 
even  the  free  coinage  of  silver  by  all  nations,  the  invitation 
was  finally  sent  out  in  that  form,  and  nearly  all  the  powers  to 
which  it  was  sent  accepted.  Much  delay  was  occasioned,  how- 
ever, in  the  settlement  of  a  place  of  meeting.  As  usual,  Paris 
seemed  the  most  convenient  centre,  but  France  was  far  less 
enthusiastic  than  in  1881,  and  the  government  rather  resented 
the  imputations,  which  had  been  thrown  out  from  some  quar- 
ters, that  her  frequent  advances  in  the  cause  of  bimetallism 
were  due  to  self-interest.  She  had  been  very  successful  in  the 
accumulation  of  a  large  gold  reserve,  had  just  saved  the  Bank 
of  England,  and  preferred  that  some  other  government  should 
act  as  host.  She  therefore  sent  a  polite  declination  to  accept 


EVENTS  OP  AN  UNFAVORABLE  CHARACTER          371 

the  honor  of  making  Paris  the  place  of  meeting.  England  was 
sounded,  but  the  government  expressed  a  doubt  as  to  whether 
the  interests  of  the  conference  would  be  promoted  at  London. 
Finally  Brussels  was  determined  upon,  and  it  was  on  the  whole 
a  very  appropriate  place.  There  had  been  some  change  in  the 
opinion  of  the  Belgian  government,  which  in  every  conference 
theretofore  had  stood  as  an  uncompromising  adherent  of  gold 
monometallism. 

Negotiations  on  this  point  and  some  others  went  on  during 
a  greater  part  of  1891  and  1892,  so  that  the  time  of  meeting 
was  deferred  till  November  of  the  latter  year.  Some  writers 
have  held  that  the  taint  of  partisan  politics  attached  to  the 
scheme  from  the  beginning,  and  was  responsible  for  the  delay; 
but  there  do  not  seem  to  be  sufficient  grounds  for  the  belief. 
It  is  easy  to  charge  with  political  designs  those  in  official  life, 
and  none  know  so  well  as  such  officials  how  commonly  steps 
taken  with  the  highest  motives  are  attributed  to  partisanship 
or  worse.  If  the  design  had  been  to  use  the  conference  to  take 
the  Silver  Question  out  of  the  presidential  campaign  of  1892, 
it  would  hardly  have  been  delayed  till  after  the  election ;  and 
had  it  been  possible  to  have  arranged  the  meeting  so  that  it 
would  have  been  in  progress  during  an  exciting  campaign,  it 
is  doubtful  if  it  would  have  been  wise,  for  other  than  political 
reasons. 

It  is  unquestionably  true,  however,  that  during  the  interval 
of  delay  some  events  of  an  unfavorable  character  occurred 
abroad.  The  financial  condition  of  England  improved,  and 
while  the  bimetallic  sentiment  continued  to  grow  in  strength 
and  influence,  the  government,  by  a  change  of  party  control, 
became  decidedly  less  friendly  to  bimetallism.  The  agitation 
which  began  in  1891,  after  Sir  David  Barbour's  financial  state- 
ment, for  placing  India  on  a  gold  standard,  gradually  assumed 
the  form  of  a  definite  policy  in  1892,  under  the  growing  im- 
pression that  the  United  States  would  repeal  the  act  of  1890, 


372  THE  STRUGGLE  FOR  GOLD 

and  thus  leave  India  to  suffer  alone  from  a  frightful  drop  in 
silver.  But  the  Indian  government  would  have  much  pre- 
ferred bimetallism.  The  Secretary  of  the  Bengal  Chamber  of 
Commerce  wrote  to  the  Indian  government  in  February,  1892, 
urging  that,  if  there  were  no  possibility  of  a  bimetallic  agree- 
ment, India  must  endeavor  to  go  to  the  gold  standard  as 
speedily  as  possible.  The  Governor-General,  Marquis  of 
Lansdowne,  urged  the  policy  repeatedly  during  1892  in  his 
letters  to  the  English  government.  In  June  he  expressed  his 
satisfaction  at  the  acceptance  of  the  invitation  of  the  United 
States  to  take  part  in  a  conference,  but  regretted  that  it  had 
not  been  summoned  to  .consider  the  adoption  of  an  interna- 
tional agreement  for  the  free  coinage  of  silver  instead  of  a 
more  extended  use  of  the  metal.  He  could  not  overlook  the 
strong  opposition  to  the  introduction  of  the  double  legal  ten- 
der in  England,  and  feared  that  a  refusal  of  England  to  do  so 
might  be  fatal  to  India.  Reviewing  all  the  facts  in  the  case, 
he  said :  "  We  desire  to  place  on  record,  for  your  lordship's 
information,  our  deliberate  opinion  that,  if  it  becomes  evident 
that  the  international  conference  is.  unlikely  to  arrive  at  a 
satisfactory  conclusion,  and  if  a  direct  agreement  between 
India  and  the  United  States  is  found  to  be  unattainable,  the 
government  of  India  should  at  once  close  its  mints  to  the  free 
coinage  of  silver,  and  at  once  make  arrangements  for  the  intro- 
duction of  the  gold  standard."  He  urged  that  measures  be 
taken  in  advance  so  that  India  could  go  to  a  gold  standard  at 
any  time  when  it  became  apparent  that  the  conference  would 
fail,  or  that  the  United  States  would  abandon  silver  purchases. 
Petitions  poured  in  from  merchants  in  both  India  and  Eng- 
land, for  bimetallism,  if  possible,  but  if  not,  for  the  gold  stand- 
ard for  Indian  currency,  and  the  government  responded  by  ap- 
pointing in  September  a  commission  to  investigate  the  question 
and  advise  as  to  the  best  course  to  pursue.  The  members  were 
Lord  Herschell,  who  had  presided  over  the  Commissions  on 


AUSTRIA-HUNGARY  ADOPTS  THE  GOLD  STANDARD  373 

the  Depression  of  Trade  and  on  Gold  and  Silver,  Leonard 
Courtney,  Thomas  Farrar,  Sir  Reginald  E.  Welby,  Arthur 
Godley,  Sir  Richard  Strachey,  and  Bertram  Currie. 

But  no  sooner  had  the  commission  been  appointed  than  pro- 
tests against  meddling  with  the  currency  began  to  pour  in 
from  the  Indian  producing  and  trading  classes.  They  claimed 
that  the  country  made  an  enormous  gain  in  its  international 
trade  through  the  depreciation  of  silver,  the  increased  receipts 
for  exports  far  exceeding  the  increased  rupee  price  paid  for 
imports.  Associations  all  over  India  petitioned  the  House  of 
Commons  to  refuse  to  permit  the  adoption  of  the  plan  urged  by 
the  government,  and  which  they  claimed  would  benefit  the 
functionaries  only.  With  such  contradictory  appeals  before 
them  the  commission  suspended  its  labors  in  November  to 
await  the  result  of  the  international  conference. 

Another  unfavorable  occurrence  during  the  delay  in  the 
arrangements  was  the  definite  adoption  by  Austria-Hungary 
of  the  gold  standard.  It  is  a  curious  fact,  and  significant  as 
showing  how  our  efforts  to  help  silver  have  always  hurt  it,  that 
this  event  was  hastened  by  the  Silver  Purchase  Act  of  1890, 
and  the  consequent  temporary  rise  in  silver.  Otherwise,  it 
is  doubtful  if  it  would  have  taken  place  for  some  time.  The 
situation  was  this:  the  great  industry  of  Hungary  is  agricult- 
ure, and,  while  there  was  a  marked  difference  in  the  relative 
value  of  gold  and  silver,  it  was  to  the  advantage  of  Hungarian 
land-owners  to  retain  a  silver  currency,  inasmuch  as  the  wages 
they  paid  to  the  laborer  who  produced  their  crops  was  silver, 
while  their  surplus  was  marketed  in  central  Europe  \vhere  na- 
tions maintained  a  gold  basis,  the  gain  in  exchanging  the  two 
metals  being  an  important  part  of  the  land-owners'  profits.  On 
the  other  hand,  Austria  is  a  manufacturing  country,  and  much 
of  the  raw  material  had  to  be  purchased  abroad  with  gold,  while 
the  products  of  the  factories  were  largely  marketed  in  Hun- 
gary, where  silver  was  received  for  them.  Austria  could  not  in- 


374  THE  STRUGGLE  FOR  GOLD 

duce  Hungary  to  agree,  therefore,  to  her  programme,  and  prob- 
ably would  have  failed,  had  not  the  price  of  silver  rose  so  near 
to  parity  with  gold  in  the  summer  of  1890.  At  that  time  the 
two  governments  agreed  to  nominate  legislative  committees  to 
meet  and  discuss  the  subject  of  a  currency  basis,  and,  if  possi- 
ble, arrange  a  coinage  which  would  be  satisfactory  to  both  sec- 
tions of  the  country.  The  result  was  that  in  the  summer  of 
1891  the  two  governments  agreed  to  make  gold  the  standard  of 
their  future  currency.  Many  troublesome  questions  came  up, 
such  as  whether  the  value  of  the  future  florin  should  be  given 
the  value  of  the  existing  gold  florin,  or  of  the  existing  silver 
florin,  but  a  compromise  was  made  by  reducing  the  value  of 
the  gold  florin  but  overvaluing  the  old  silver  coins,  and  the 
laws  were  finally  passed  in  the  summer  of  1892,  or  at  the  same 
time  that  the  Indian  government  was  appealing  for  a  gold 
standard. 

Another  unfavorable  circumstance  was  the  apparent 
change  in  Dutch  opinion.  The  Netherlands  government  had 
been  a  strong  advocate  of  the  double  standard  in  the  mone- 
tary conferences,  and  was  yet  upon  broad  lines,  for  her  finances 
were  still  in  the  same  hands,  but  further  experience  had  con- 
vinced her  statesmen  that  it  would  cost  their  government  too 
much  to  adopt  bimetallism  under  any  agreement  for  a  limited 
union.  The  government  was  using  every  means  in  its  power  to 
decrease  its  silver  and  increase  its  gold  currency. 

But  perhaps  the  most  unfortunate  circumstance  of  all 
in  its  influence  was  the  changes  that  had  meanwhile  oc- 
curred in  gold  holdings  of  European  banks.  Before  this  the 
United  States  had  appeared  at  conferences  as  an  easy  accu- 
mulator and  large  holder  of  the  coveted  metal,  and  Europe  had 
been  troubled  with  low  reserves.  The  situation  was  reversed. 
A  shrinkage  in  the  gold  reserve  was  troubling  the  United 
States,  while  all  the  banks  of  issue  in  Europe  had  by  desperate 
expedients  improved  their  situations,  some  of  them  in  a  marked 


CHANGES  IN  GOLD  HOLDINGS  375 

manner.  The  following  table  shows  the  approximate  condition 
of  the  reserves  in  the  principal  banks  of  Europe  at  the  time  the 
United  States  began  to  consider  the  question  of  another  con- 
ference early  in  1891  and  at  the  time  the  conference  met: 

1891.  1892. 

Bank   of   England,       .          .     $100,000,000  $117,000,000 

Bank    of    France,          .          .       200,000,000  325,000,000 

Bank   of   Germany,      .          .       125,000,000  1(X),000,000 

Bank    of    Russia,          .          .       205,000,000  320,000,000 

United    States   gold    reserve,       190,000,000  114,000,000 

The  change  is  apparent.  In  the  course  of  eighteen  months 
the  chief  European  banks  of  issue  made  a  large  gain  in  their 
gold  resources.  Still  more  striking  was  the  change  between 
the  time  of  the  conference  of  1881  and  that  of  1892.  In  1881 
France  had  been  a  severe  sufferer  from  loss  of  gold;  in  1892 
France  was  content,  but  England  had  been  the  greatest  suf- 
ferer, and  no  foreign  nation  took  so  much  interest  in  the  con- 
ference of  1892  as  England.  She  was  the  predominating  in- 
fluence in  it,  but  still  was  the  great  obstruction  to  international 
bimetallism. 


CHAPTER  VIII 

PROPOSED  PLANS  FOR  A  LARGER  USE  OF  SILVER— THE  CONFERENCE 

OF  1892 

OF  the  fifty  delegates  to  the  monetary  conference  of  1892, 
but  four  had  represented  their  governments  in  that  of  1881 
—  Sir  Charles  Fremaritle,  of  England,  Charles  Edouard 
Lardy,  of  Switzerland,  Dr.  Hans  Forssell,  of  Sweden,  and 
Simonelli,  of  Italy;  Lardy  alone  had  been  a  delegate  to  the 
conference  of  1878.  One,  Sir  Rivers  Wilson,  of  England,  had 
sat  in  the  conference  of  1867.  The  Indian  Currency  Commis- 
sion was  represented  by  two  delegates,  General  Strachey  and 
Bertram  Currie,  the  first  a  bimetallist  and  the  second  a  gold 
monometallist.  Two  had  served  on  the  English  Gold  and 
Silver  Commission  of  1886,  Sir  Charles  Fremantle  and  Sir 
"William  Houldsworth,  the  former  a  gold  monometallist  and 
the  latter  one  of  the  most  ardent  bimetallists  in  the  United 
Kingdom.  Such  a  bifurcated  delegation  from  England  was 
a  novelty  in  monetary  conferences,  and  indicated  the  change 
in  public  opinion;  but,  with  the  other  members,  gold  mono- 
metallism easily  predominated.  The  Erench  delegation  was 
entirely  new,  and  it  is  noticeable  that,  while  in  1881  France 
was  represented  by  such  earnest  bimetallists  as  De  Normandie 
and  Cernuschi,  in  1892  her  delegation  was  an  indifferent  one. 
On  the  other  hand,  Belgium,  which  sent  to  the  conference  of 
1881  the  stanchest  gold  advocate  there,  Euodore  Pirmez,  in 
1892  \vas  represented  by  one  disciple  of  Pirmez,  and  by 
one  ardent  bimetallist,  a  frequent  contributor  to  the  reviews, 
and  by  three  whose  positions  as  to  bimetallism  were  less  de- 
fined. Mexico  and  Roumania  appeared  for  the  first  time  in 


THE  GOVERNMENTS  AND  TIIEIK  REPRESENTATIVES  377 

monetary  conferences.  The  chief  delegates  of  nine  of  the  gov- 
ernments were  Ministers  to  Belgium,  and  not  considered  spe- 
cialists in  monetary  matters.  The  full  list  of  delegates  is  as 
follows : 

Germany: 

Count  Alvensleben,  Minister  to  Belgium. 

Dr.  von  Glasenapp,  Councillor  in  the  Imperial  Treasury  De- 
partment. 

Hartuiig,  Director  of  the  Imperial  Bank. 
Austria-HuiHjary: 

Count  Khevenhiiller  Metsch,  Minister  to  Belgium. 
Belgium: 

Montefiore  Levi,  Senator. 

Devolder,  Director  of  the  Society  for  Promoting  National 
Industry. 

Weber,  Vice-Governor  of  the  National  Bank. 

A.  Allard,  Honorary  Director  of  the  Mint. 

Sainctelette,  Commissioner  of  the  Mint. 
Denmark: 

C.  F.  Tietgen,  Privy  Councillor  of  State. 

Frederic  G.  Schack  de  Brockdorff,  Consul-General  at  Ant- 
werp. 
Spain: 

J.  Surra  y  Rull,  Commissioner  of  the  Mint. 

J.  Sanchez  de  Toca,  Member  of  the  House  of  Representatives. 

G.  J.  de  Osma,  Member  of  the  House  of  Representatives. 
United  States: 

Edwin  H.  Terrell,  Minister  to  Belgium. 

William  B.  Allison.  Senator. 

John  P.  Jones,  Senator. 

James  B.  McCreary,  Member  of  Congress. 

Henry  W.  Cannon,  President  of  the  Chase  National  Bank, 
New  York. 

E.    Benjamin    Andrews,    President    of    Brown    University, 

Providence. 
France: 

Tirard,  ex-Minister  of  Finance. 

Liron  d'Airoles.  Councillor  of  State,  Director  of  the  Adminis- 
trations of  Coins  and  Medals. 

Foville.  Chief  of  the  Bureau  of  Statistics  and  Legislation 

in  the  Ministry  of  Finance. 
Great  Britain: 

Sir  Charles  Fremantle,  Deputy  Master  of  the  Mint. 

Sir  C.   Rivers  Wilson,   Comptroller-General   of  the   Public- 
Debt  Office. 

Sir  William  Houldsworth,  Manchester  Manufacturer. 

Alfred  de  Rothschild.  Banker  and  Director  of  the  Bank  of 
England. 

Bertram  Currie. 
Greece: 

P.  Mulle,  Consul-General  at  Brussels. 


378  THE  CONFERENCE  OP  1892 

British  India: 

Gen.  Strachey. 

Sir  Guilford  L.  Molesworth. 

Italy: 

Baron  de  Renzis,  Minister  to  Belgium. 

Simonelli,  Deputy. 

Zeppa,  Deputy. 
Mexico: 

Don  Antonio  de  Mier  y  Cells. 

Don  Joaquin  D.  Casasus,   Deputy. 

Gen.  Francisco  Z.  Mena* 
Norway: 

Hagbard  Berner,  Director  of  the  Mortgage  Bank  of  Norway. 
The  Netherlands: 

Van  den  Berg,  President  of  the  Netherlands  Bank. 

Boissevain,    Member    of    the    Statistical    Institute    of    the 

Netherlands. 
Portugal  : 

D'Antas,  Minister  to  Belgium. 
Rovmania: 

Bengesco,  Minister  to  Belgium. 
Russia: 

Prince  Ouroussoff,  Minister  to  Belgium. 

A.  Raffalovich,  Councillor  of  State,  Agent  of  the  Imperial 

Finance  Ministry  at  Paris. 
Sweden : 

Dr.  Hans  Forssell,  ex-Minister  of  Finance. 
Switzerland: 

Charles  E.  Lardy,  Minister  at  Paris. 

Alphonse  Rivier,  Consul-General  in  Belgium. 

Conrad  Cramer-Frey,  National  Councillor. 
Turkey: 

Etienne  Caratheodory  Effendi,  Minister  to  Belgium. 

Allard,  Consul-General  at  Brussels. 

Beernaert,  the  Belgian  premier,  opened,  the  conference 
with  an  address  of  welcome,  and  some  general  statements  on 
the  monetary  situation.  Montefiore  Levi,  of  Belgium,  was 
chosen  president,  and  Minister  Terrell,  of  the  United  States, 
vice-president.  In  his  speech  on  taking  the  chair,  Levi  said 
that,  whatever  might  be  the  result  of  the  deliberations,  the 
conference  would  have  it  at  heart  to  investigate  the  possibility 
of  remedying  the  condition  of  affairs  of  which  none  mistook  the 
gravity.  At  Senator  Allison's  suggestion,  the  conference  then 
adjourned  for  three  days,  as  the  delegates  of  the  United  States 
wished  to  consult  as  to  the  propositions  they  should  submit 
for  consideration. 


AMERICAN  DELEGATES  ADOPT  A  QUEER  COURSE  379 

The  plan  they  agreed  to  present  was  unique.  In  the  con- 
sideration of  means  for  a  larger  use  of  silver,  it  is  obvious  that 
international  free  coinage  should  come  first  if  at  all;  if  an 
agreement  for  the  full  use  of  silver  became  impossible,  the 
next  step,  naturally,  would  be  to  consider  means  for  the  largest 
use  short  of  free  coinage,  and  so  on  till  the  largest  use  possible 
was  found.  Instead  of  this,  the  American  delegates  asked  for 
the  consideration  of  plans  for  a  limited  use  first. 

It  is  difficult  to  reconcile  this  course  with  the  instructions 
given  by  the  Secretary  of  State  on  November  10.  "  It  is  the 
opinion  of  the  President,  and,  as  he  believes,  of  the  people  of 
the  United  States,  with  singular  unanimity,"  said  the  Secre- 
tary, "  that  a  full  use  of  silver  as  a  coined  metal,  at  a  ratio  to 
gold  to  be  fixed  by  an  agreement  between  the  great  commer- 
cial nations  of  the  world,  would  very  highly  promote  the  pros- 
perity of  all  the  people  of  all  the  countries  of  the  world.  For 
this  reason  your  first  and  most  important  duty  will  be  to  secure, 
if  possible,  an  agreement  between  the  chief  commercial  coun- 
tries of  the  world  looking  to  international  bimetallism  —  that 
is,  the  unlimited  coinage  of  gold  and  silver  into  money  of  full 
debt-paying  power  at  a  fixed  ratio  in  coinage  common  to  all 
the  agreeing  powers.  .  .  .  Failing  to  secure  international 
bimetallism,  the  next  important  duty  will  be  to  secure,  if  possi- 
ble, some  action  upon  the  part  of  European  countries  looking 
to  a  larger  use  of  silver  as  currency,  in  order  to  put  an  end  to 
the  further  depreciation  of  that  metal. 

The  delegates,  by  stipulating  for  the  consideration  of  plans 
which  the  government  rated  as  secondary,  seemed  to  admit  at 
once  the  impossibility  of  securing  bimetallism,  though  they 
evidently  had  no  such  intention. 

A  possible  explanation  of  this  inverted  course  of  action, 
contrary  to  the  instructions  of  their  government,  is  that  they 
were  satisfied  an  agreement  would  be  impossible  on  any 
plan  for  limited  coinage  or  purchases,  and  that  the  conference 


380  THE  CONFERENCE  OF  1S92 

would,  in  due  time,  arrive  at  the  point  where  it  must  take  bi- 
metallism or  nothing.  They  seemed  to  feel  confident  that 
England  was  too  deeply  concerned  to  allow  the  conference  to 
adjourn  without  result,  and  that,  if  the  United  States  refused 
to  accept  anything  short  of  bimetallism,  England  would  event- 
ually yield.  If  this  were  the  motive  for  the  programme,  it  did 
not  result  as  expected. 

At  the  opening  of  the  session  on  the  25th,  Senator  Allison 
presented  printed  copies  of  the  programme  and  statement, 
which  were  as  follows : 

"  It  is  generally  admitted  that  the  very  large  depreciation  in 
silver,  as  compared  with  gold,  during  the  last  twenty  years,  and 
the  frequent  and  violent  fluctuations  in  the  gold  price  of  silver  in- 
cident thereto,  have  been  injurious  to  the  commercial  and  other 
economic  interests  of  all  civilized  countries,  and  have  caused,  and 
are  causing,  serious  evils  and  inconveniences  to  trade,  the  full  ex- 
tent of  which  cannot  yet  be  measured. 

"  It  is  the  opinion  of  the  people  of  the  United  States,  with  singu- 
lar unanimity,  that  the  establishment  of  some  fixity  of  value  be- 
tween gold  and  silver  and  the  full  use  of  silver  as  a  coin  metal,  upon 
a  ratio  to  gold  to  be  fixed  by  an  agreement  between  the  great  com- 
mercial nations  of  the  world,  would  very  greatly  promote  the  pros- 
perity of  all  classes  of  people.  They  are  not  unaware,  however, 
of  the  fact  that  public  opinion  in  some  of  the  other  countries  whose 
co-operation  in  a  successful  movement  for  such  an  agreement  is 
most  desirable  may  not  fully  accord  with  the  views  entertained  in 
the  United  States  as  to  the  practicability  of  such  an  agreement. 
They  believe,  however,  that  a  sentiment  for  a  larger  use  of  silver 
as  a  money  metal  has  been  steadily  growing  throughout  the  world, 
and  that  the  time  is  propitioiis  for  holding  an  international  con- 
ference to  consider  the  subject.  The  government  of  the  United 
States,  while  frankly  disclosing  its  own  views  as  to  the  proper 
remedy  to  be  applied,  did  not  wish  to  impose  any  conditions  that 
would  embarrass  any  government  that  might  be  willing  to  confer 
upon  the  most  advantageous  relation  of  silver  to  the  coinage  of  the 
world. 

"  For  these  reasons  the  government  of  the  United  States  pro- 
posed a  convention  of  the  powers  for  the  purpose  of  conferring  as  to 
what  measures,  if  any,  can  be  taken  to  increase  the  use  of  silver 
as  money. 

"  In  conformity  to  the  general  purpose  of  this  conference,  the 
delegates  of  the  United  States  offer  the  following  resolution: 

" '  That,  in  the  opinion  of  this  conference,  it  is  desirable  that 
some  measures  should  be  found  for  increasing  the  use  of  silver  in 
the  currency  systems  of  the  nations.' 

"  In  presenting,  as  requested,  a  further  programme  to  be  laid 
before  the  conference,  the  delegates  of  the  United  States  consider 
It  to  be  due  to  the  other  nations  here  represented  that  an  opportunity 


THE  PROPOSITIONS  OP  THE  UNITED  STATES  381 

should  bo  afforded  them  to  consider  plans  for  the  enlarged  use  of 
silver  us  money  other  than  one  favored  by  the  United  States.  It  is 
our  desire  and  expectation  that  the  powers  represented  at  this  con- 
ference, or  some  of  their  delegates,  should  submit  proposals  looking 
to  this  end;  and  we  desire  that  these  proposals  should  have  prece- 
dence in  the  discussion.  In  addition  to  any  plans  of  the  kind  which 
may  be  presented,  we  submit  for  discussion  the  following,  which 
have  been  suggested  by  recognized  authorities.  At  the  same  time, 
we  submit  the  general  plan  of  international  bimetallism  which  is 
favored  by  the  United  States: 

"  1.  The  plan  of  M.  Moritz  Levy,  proposed  to  the  monetary 
conference  of  1881. 

"  II.  The  plan  of  the  late  distinguished  A.  Soetbeer. 

"  Lastly,  we  present  the  plan  favored  by  ourselves  as  delegates 
of  the  United  States  of  America: 

"  1.  That  the  re-establishment  and  maintenance  of  a  fixed 
parity  between  gold  and  silver,  and  the  continued  use  of  both  as 
coined  money  of  full  debt-paying  power,  would  be  productive  of  im- 
portant benefits  to  the  world. 

"  2.  That  these  ends  can  be  accomplished  by  removing  the 
legal  restrictions  which  now  exist  on  the  coinage  of  silver  into  full 
legal-tender  money,  and  restoring,  by  international  agreement,  the 
parity  of  value  between  the  metals  which  existed  prior  to  1873,  at 
such  ratio  as  may  be  decided  upon  by  this  conference. 

"  3.  That  the  essential  provisions  of  such  an  international  ar- 
rangement should  be: 

"  (a)  Unrestricted  coinage  of  both  gold  and  silver  into  money  of 
full  debt-paying  power. 

"  (6)  Fixing  the  ratio  in  coinage  between  the  two  metals. 

"  (c)  Establishing  a  uniform  charge  (if  anjT)  to  the  public  for  the 
manufacture  of  gold  and  silver  coins." 

In  submitting  this  programme  Senator  Allison  said  that 
it  would  have  been  difficult  for  his  delegation  to  prepare  a 
proposition  for  the  enlarged  use  of  silver  among  the  nations, 
limited  as  to  coinage,  which  could  be  answered  by  yes  or  no, 
for  they  were  not  sufficiently  familiar  with  the  political  policy 
of  the  states  of  Europe  as  regards  their  autonomy  and  methods 
to  enable  them  to  formulate  a  definite  project  necessarily  so 
complex  in  its  nature.  It  was  their  desire,  therefore,  that  the 
European  delegates  should  feel  free  to  present  plans  for  the 
consideration  of  the  conference,  while  the  United  States  dele- 
gates confined  themselves  to  giving  in  detail  the  plan  which 
they  favored.  He  then  offered  for  immediate  consideration 
the  resolution  that,  in  the  opinion  of  the  conference,  it 
was  desirable  to  find  some  measures  for  increasing  the  use  of 


382  THE  CONFERENCE   OF  1892 

silver  among  the  nations  —  a  resolution  which  merely  restated 
the  terms  under  which  the  conference  had  convened. 

England  was  the  first  to  come  forward.  Speaking  in  the 
name  of  all  the  English  delegates,  Sir  Rivers  Wilson  said, 
they  accepted  the  resolution  as  it  stood,  but  felt  that,  as  it  was 
only  a  recapitulation  of  the  invitation  which  had  already  been 
accepted,  it  need  not  be  discussed.  They  were  there  to  dis- 
cuss plans  for  the  increase  of  the  circulation  of  silver,  and 
would,  therefore,  reserve  for  a  later  time  their  observations 
upon  the  plan  that  might  be  submitted.  "With  that,  Rothschild 
laid  on  the  table  his  plan,  which  undoubtedly  had  received 
the  sanction  of  the  English  government,  and  which,  later,  re- 
ceived so  much  attention  in  the  conference  and  outside.  Spain, 
Denmark,  Mexico,  and  Holland  joined  with  England  in  ac- 
cepting unequivocally  the  abstract  resolution  of  the  United 
States,  but  Germany,  Austria-Hungary,  and  Russia  practi- 
cally doomed  the  conference  to  failure  by  stating  that  they 
were  prohibited  by  their  instructions  from  debating  or  voting 
upon  any  resolution  whatever.  As  to  Germany,  Count  Alven- 
sleben  said  that,  being  satisfied  with  its  monetary  system,  it  had 
no  intention  of  modifying  its  basis.  But  his  government  did 
not  fail  to  recognize  that  the  continual  oscillation  and  the 
considerable  fall  of  silver  were  much  to  be  regretted  from  an 
economic  point  of  view,  and  that  it  would  be  of  great  advan- 
tage to  the  empire  if  the  evils  could  be  remedied  in  a  lasting 
manner,  and  for  these  reasons  the  invitation  of  the  United 
States  to  join  in  a  conference  had  been  accepted.  Roumania, 
Portugal,  Greece,  and  Turkey  expressed  similar  reservations 
as  to  this  particular  resolution,  though  without  any  specific 
instructions;  indeed,  the  Turkish  delegate  seemed  to  have  re- 
ceived no  instructions  whatever,  and  he  felt  that  he  could  not 
express  any  opinion  on  money  without  first  referring  it  to  his 
government. 

The  position  of  France  was  disappointing.    She  could  not 


POSTPONEMENT  OF  ALLISON'S  RESOLUTION  383 

repeat  too  often,  said  Tirard,  that,  having  one  of  the  largest 
holdings  of  the  white  metal,  she  was  very  much  interested  in 
the  question  before  the  conference,  "  but,"  he  added,  "  this 
enormous  quantity  of  silver  which  France  already  owns  im- 
poses upon  her  the  greatest  prudence,  and  she  will  not  accept 
any  proposal  except  upon  the  condition  that  this  stock  of  de- 
preciated metal  shall  not  be  increased,  or,  supposing  that  it  be 
increased,  that  it  shall  not  fail  to  offer  very  important  com- 
pensations." He  was  disappointed  in  the  order  of  proceedings 
the  United  States  had  laid  down,  for  international  bimetal- 
lism, the  principal  question,  that  which  was  fundamental  and 
embraced  everything,  was  left  to  the  last,  while  subsidiary  pro- 
posals, which  would  naturally  come  up  when  it  had  been  found 
impossible  to  adopt  the  main  proposal,  were  placed  first.  He 
did  not  oppose  the  resolution,  but  would  reserve  complete 
liberty  of  action  as  to  plans  for  a  limited  increase  in  the  use 
of  silver,  so  as  in  no  way  to  prejudice  the  examination  of  the 
broader  proposal  of  bimetallism.  Italy  and  Belgium  took 
practically  the  same  position,  though  Switzerland  held  the 
same  attitude  as  in  the  conferences  of  1878  and  1881  - 
friendly  to  the  gold  standard,  but  subordinated  to  the  Latin 
Union. 

Forssell,  of  Sweden,  thought  it  would  be  premature  to 
vote  upon  the  resolution  of  the  United  States  before  the  means 
by  which  the  use  of  silver  could  be  enlarged  were  known.  He 
proposed  postponing  it  till  after  an  examination  of  the  plans 
which  might  come  before  the  conference,  and  the  motion  was 
supported  by  Raffalovich,  of  Russia,  and  Boissevain,  of  Hol- 
land. Senator  Allison  thereupon  stated  that  he  wwild  not 
insist  upon  an  immediate  vote,  preferring  to  adopt  the  method 
of  procedure  most  agreeable  to  the  assembly.  The  president, 
therefore,  proposed  to  drop  the  resolution  and  enter  upon  a  con- 
sideration of  the  plans,  beginning  with  that  of  Rothschild,  at 
the  next  session,  a  proposal  which  was  adopted;  and,  owing  to 


384  THE  CONFERENCE  OF  1892 

the  course  of  later  events,  this  initial  resolution  was  not  again 
taken  up,  though  there  is  scarcely  a  doubt  that  it  would  have 
received  a  unanimous  vote  in  the  conference  at  any  time  in 
its  deliberations. 

The  plan  submitted  by  Rothschild  was  accompanied  by  a 
statement  giving  the  text  of  a  letter  he  had  written  to  the 
Gold  and  Silver  Commission  in  1886,  insisting  upon  gold 
monometallism  as  the  only  possible  policy  for  England,  and 
pointing  out  the  dangers  to  the  Bank  of  England  under  a  bime- 
tallic system.  These  sentiments,  Rothschild  went  on  to  say 
in  his  statement  to  the  conference,  he  still  held,  and  he  gave 
some  additional  reasons  for  maintaining  them.  While  ven- 
turing to  hope  that  he  had  conclusively  shown  the  absolute 
impossibility  of  bimetallism  for  England,  "  still,"  he  said,  "  the 
question  arises  whether  it  is  not  possible  to  extend  the  use  of 
silver  generally,  and  thereby  stop  a  further  fall,  the  disastrous 
consequences  of  which  no  one  can  foresee.  I,  therefore,  take 
the  liberty  of  respectfully  submitting  a  proposal  for  your  kind 
consideration.  It  would  be  presumptuous  on  my  part  to  imag- 
ine that  I  could  suggest  an  absolute  and  lasting  remedy,  but  I 
think  a  palliative  might  be  found  in  the  following  form : 

"  The  American  government  are  purchasers  of  silver  to  the  ex- 
tent of  54  millions  of  ounces  yearly,  and  I  would  suggest  that,  on 
condition  these  purchases  were  continued,  the  different  European 
powers  should  combine  to  make  certain  yearly  purchases,  say  to  the 
extent  of  about  £5,000,000  sterling  annually,  such  purchases  to  be 
continued  over  a  period  of  five  years  at  a  price  not  exceeding  43 
pence  per  ounce  standard,  but,  if  silver  should  rise  above  that  price, 
the  purchases  for  the  time  being  to  be  immediately  suspended.  The 
details  of  such  a  scheme  to  form  the  subject  of  an  international 
agreement  to  be  discussed  by  representatives  of  the  different 
powers." 

He  left  it  with  the  conference,  if  it  should  approve  of  the 
plan,  to  supplement  it  in  any  way  it  saw  fit  before  submitting  it 
to  their  governments,  and  he  believed  that,  should  the  expres- 
sion of  the  conference  be  unanimous,  it  would  have  great 
weight  in  the  ultimate  settlement  of  the  vexed  question.  He 
hoped  the  United  States  would  find  it  acceptable,  and  he  could 


ROTHSCHILD  ADVOCATES  HIS  PLAN  385 

see  no  objection,  so  far  as  England  was  concerned,  in  further 
making  silver  legal  tender  up  to  £5  instead  of  £2.  He  also 
thought  the  proposal  would  be  well  received  in  India.  "  The 
bulk  of  the  population,"  he  said,  "  would  recognize  that  no 
material  alteration,  if  any,  had  been  suggested,  while  the  mer- 
chants and  bankers  would  know  that  the  exchanges  had  been 
given  a  stability  which  could  not  be  disturbed  for  a  period  of 
five  years;  for,  if  I  am  not  misinformed,  it  is  the  instability  in 
the  exchange  which  is  the  principal  factor  in  the  complaints 
from  India,  rather  than  the  depreciation  in  the  value  of  the 
rupee  itself."  But  a  material  depreciation  in  the  value  of  the 
rupee  would  be  a  great  calamity,  he  continued,  affecting  the 
savings  of  hundreds  of  millions  of  people.  If  it  were  objected 
that  the  plan  proposed  certain  sacrifices  on  the  part  of  other 
countries  not  so  immediately  interested  as  England  and  India, 
he  could  only  say  that  what  was  right  and  best  for  the  world 
in  general  must  eventually  prove  to  be  best  for  individual 
interests. 

Rothschild  seemed  to  overlook  the  fact  that  this  was  the 
very  argument  bimetallists  had  used  in  their  vain  appeals  to 
England  in  times  past.  The  boot  was  on  the  other  leg.  Fif- 
teen years  before  the  warnings  had  come  from  bimetallists 
and  were  regarded  either  with  indifference  or  scorn  by  Eng- 
land. It  was  Rothschild,  an  English  delegate,  ^ho,  in  1892, 
used  these  ominous  words:  "  Gentlemen,  I  need  hardly  re- 
mind you  that  the  stock  of  silver  in  the  world  is  estimated  at 
some  thousands  of  millions,  and  if  this  conference  were  to 
break  up  without  arriving  $t  any  definite  result  there  would 
be  a  depreciation  in  the  value  of  that  commodity  which  it 
would  be  frightful  to  contemplate,  and  out  of  which  a  mone- 
tary panic  would  ensue,  the  far-spreading  effects  of  which  it 
would  be  impossible  to  foretell." 

The  underlying  motives  in  the  Rothschild  plan  do  not  seem 

to  have  been  fully  appreciated  at  once  by  the  conference,  or, 
25 


386  THE  CONFERENCE  OF  1892 

at  least,  by  the  American  delegates.  In  a  general  way,  they 
were  the  same  as  those  prompting  England's  interest  in  the 
conference  of  1881  —  a  desire  to  induce  some  one  else  to 
undertake  the  burden  of  relieving  England  of  embarrassments 
in  her  Eastern  commerce.  In  reality  the  Rothschild  plan  was 
a  scheme  to  bind  the  United  States  to  continue  its  large  pur- 
chases of  silver.  Because  of  the  fear  and  belief  in  India  that 
these  purchases  would  be  discontinued,  a  plan  for  the  adoption 
of  the  gold  standard  had  been  formed  by  Sir  David  Barbour 
of  the  Indian  government,  and  had  been  submitted  to  the 
Indian  Currency  Commission,  together  with  several  petitions 
for  its  acceptance.  As  we  have  seen  also,  it  had  been  followed 
by  numerous  protests  from  the  producing  classes  against  its 
adoption.  The  English  government  and  the  commission  con- 
sidered it  an  uncertain  and,  perhaps,  a  dangerous  step,  yet 
they  thought  that  if  silver  should  fall  much  lower  the  condi- 
tions of  trade  would  become  well-nigh  intolerable.  The  Indian 
population  was  wedded  to  silver.  There  was  the  enormous 
mass  of  1,150,000,000  rupees  in  active  circulation,  to  say 
nothing  of  the  fabulous  hoards,  and  the  gravest  political  trou- 
bles might  follow  the  demonetization  and  consequent  depre- 
ciation of  such  a  treasure.  The  accumulation  of  gold  in  India 
for  the  purposes  of  adopting  a  standard  based  on  that  metal 
was  to  England  almost  unthinkable,  when  she  had  all  she  could 
do  to  get  and  to  keep  gold  enough  for  herself,  and  it  was  in  this 
state  of  the  case  that  the  Indian  Currency  Commission  had  sus- 
pended its  deliberations  to  see  what  could  be  done  at  the  con- 
ference. 

If  it  could  be  known  that  the  United  States  would  continue 
their  purchases  of  silver,  or,  better  still,  be  somehow  inveigled 
into  free  coinage  by  themselves,  the  English  government  would 
not  think  of  changing  the  Indian  currency.  But  not  knowing 
this,  and  doubting  whether  our  silver  purchases  would  long 
continue,  it  was  proposed  that,  on  condition  that  the  United 


UNDERLYING  MOTIVES  FOR  THE  ROTHSCHILD  PLAN  387 

States  would  continue  to  purchase  54,000,000  ounces  of  silver 
yearly  at  any  price  below  59  pence,  Europe  would  buy  £5,000,- 
000  worth  annually,  or  about  half  as  much  as  the  United  States 
were  purchasing,  provided  the  price  of  silver  did  not  go  above 
43  pence  per  ounce. 

There  was  only  one  handle  to  that  jug.  In  other  words,  the 
United  States  would  be  compelled  to  buy  its  monthly  quota  for 
five  years,  adding  over  $200,000,000  to  their  legal-tender 
circulation,  while  England  and  Europe  would,  under  the  cir- 
cumstances, be  compelled  to  buy  very  little,  if  any  at  all.  The 
reason  for  this  is  plain  enough.  It  will  be  remembered  that 
at  the  time  of  the  passage  of  the  act  of  1890  the  price  of 
silver  rose  to  54  pence,  and  for  some  time  before  the  confer- 
ence had  held  fairly  steady  at  43  pence,  though  shortly  before 
it  fell  to  about  39  pence.  An  international  agreement,  it  was 
thought,  would  have  a  similar  and  even  greater  effect  in  raising 
the  price ;  the  moment  it  became  assured,  under  the  Rothschild 
plan,  silver  would  easily  rise  from  39  to  43  pence,  probably 
higher,  and  England  could  then  sit  back  and  enjoy  the  situa- 
tion, while  the  United  States  were  doing  all  the  purchasing. 

If,  after  a  time,  the  price  should  fall  slightly  below  43, 
Europe,  for  England's  benefit,  would  purchase  a  little,  and 
quickly  bring  the  price  back  to  the  non-purchasing  point,  the 
centre  of  the  silver  market  being  in  London,  where  there 
were  exceptionable  facilities  for  controlling  matters  under  such 
an  arrangement.  London  bought  silver  extensively  for  India 
anyhow,  and  if  it  became  necessary  to  buy  a  little  more  to  keep 
the  price  above  43  pence,  it  could  be  done  and  sent  to  India, 
the  purchase  of  council  bills  being,  perhaps,  regulated  ac- 
cordingly. But  there  was  reason  to  suppose  that  no  purchases 
to  speak  of  would  be  necessary,  because  the  fact  that  Europe 
always  stood  ready  to  buy  below  43  would  naturally  keep 
silver  from  seriously  falling  below,  if,  indeed,  it  did  not  keep 
it  continuously  above,  that  figure. 


388  THE  CONFERENCE  OF  1892 

But  why  43  pence  ?  To  explain  this  a  few  details  from  the 
plan  of  Sir  David  Barbour,  then  before  the  Indian  Currency 
Commission,  are  needed.  In  introducing  his  plan  he  said  to 
the  English  government  that  a  gold  currency  was  impossible 
for  India;  whatever  the  standard,  the  people  required  small 
coins  for  their  small  transactions,  and  would  make  trouble  if 
they  could  not  get  them.  If  the  gold  standard  were  intro- 
duced, therefore,  the  bulk  of  the  currency  must  still  be  silver, 
and  the  only  feasible  plan  was  to  stop  the  coinage  of  silver  ex- 
cept on  government  account,  open  the  mints  to  gold,  and  make 
the  rupee  worth,  say,  16  pence  in  gold.  Now,  when  silver  is  43 
pence  per  ounce  English  standard,  the  silver  in  a  rupee  is 
worth  just  about  16  pence. 

The  Rothschild  plan,  therefore,  had  the  further  object  of 
fixing  exchange  on  a  stable  basis  between  India  and  England, 
instability  being  the  chief  cause  of  complaint,  as  Rothschild 
said  in  his  statement  recently  quoted,  and  fixing  it  at  the  figure 
considered  suitable  for  the  introduction  of  a  gold  standard  into 
India.  There  was  nothing  in  Rothschild's  plan,  as  he  drew  it, 
to  guarantee  that,  at  the  end  of  the  five  years,  India  might  not 
adopt  the  gold  standard  with  some  of  the  gold  that  meanwhile 
should  be  drawn  out  of  Indian  hiding  places,  or  forced  out  of 
the  United  States  by  the  mass  of  treasury  notes  which  our  gov- 
ernment would  be  bound,  internationally,  to  keep  increasing. 

Such  was  the  Rothschild  scheme,  or  the  scheme  of  the 
English  government,  which  the  conference  of  1892  first  took 
up  for  consideration.  It  appeared  to  some  advisable  to  send 
it  to  a  committee  for  consideration,  and,  accordingly,  when  the 
conference  reassembled  on  November  28,  Raffalovich,  of 
Russia,  made  a  motion  to  that  effect,  expressing  the  belief 
that  the  committee  should  consist  of  the  experts  in  monetary 
matters,  and  should  observe  secrecy  in  their  deliberations  till 
the  time  of  making  their  report,.  It  was  supported  by  several 
delegates,  who,  while  asserting  that  the  plan  did  not  meet  their 


A  COMMITTEE  TO  CONSIDER  PLANS  889 

ideal,  considered  that  it  should  be  seriously  considered,  in  view 
of  the  object  laid  down  in  the  invitation  to  the  conference.  It 
was  thought  best  to  also  refer  the  Levy  and  Soetbeer  plans  to 
the  committee,  the  appointment  of  which  was  left  to  the  offi- 
cers of  the  conference,  who  selected  the  following:  Cannon 
(United  States),  Casasus  (Mexico),  Cramer-Frey  (Switzer- 
land), Foville  (France),  Osma  (Spain),  Forssell  (Sweden), 
Fremantle  (England),  Molesworth  (British  India),  Raffalo- 
vich  (Russia),  Sainctelette  (Belgium),  Simonelli  (Italy),  Tiet- 
gen  (Denmark),  and  Van  den  Berg  (Netherlands).  The  presi- 
dent and  secretary  of  the  conference  were  also  added  to  the 
committee,  which  immediately  began  its  work,  and  six  meet- 
ings were  held  before  the  next  session  of  the  conference  on 
December  2. 

Its  preliminary  inquiry  was  directed  towards  these  four 
points: 

1.  The  possibility  of  legislative  measures  to  be  taken  by 
the  silver-producing  countries,  with  a  view  to  restrict  or  regu- 
late the  production  of  that  metal. 

2.  The  existing  probability  as  to  the  future  production  of 
silver  in  its  two  principal  centres,  namely,  the  United  States 
and  Mexico. 

3.  The  policy  of  the  United  States  in  regard  to  the  pur- 
chase of  silver. 

4.  The  policy  of  British  India  as  to  the  coinage  of  silver. 
As  to  the  first  question  the  American  representative  said 

that  it  would  be  very  difficult  for  the  federal  government  to 
tax  the  production  of  mines  in  which  it  had  no  direct  interest, 
and  such  a  step  was  not  at  all  probable.  The  Mexican  delegate 
said  his  government  would  dislike  to  increase  the  taxes  on  the 
mines,  as  it  would  be  harmful  to  the  industry.  He  thought  that 
the  silver  production  in  Mexico  had  reached  its  maximum. 
The  tax  had  been  successively  reduced  from  30  to  7-J  per  cent, 
on  the  gross  product,  and,  silver  being  the  great  article  of  Mexi- 


390  THE  CONFERENCE  OF  1892 

can  exportation,  the  government  had  every  interest  in  not  hin- 
dering its  sale.  The  United  States  delegate  said  that  in  his 
opinion  the  maximum  of  production  in  his  country  had  been 
nearly  reached,  if  it  had  not  already  been  passed.  As  to  silver 
purchases,  he  said  that  the  repeal  of  the  act  of  1890  had  been 
advised  by  the  two  political  parties,  and  by  the  great  bankers 
of  jSTew  York,  and  if  some  arrangement  were  not  made  in  this 
conference  it  was  probable  that  the  purchases  would  be  dis- 
continued or  decreased. 

It  will  be  understood  that  the  statement  of  the  Indian  dele- 
gate regarding  the  future  policy  of  his  country  as  to  silver 
coinage  was  of  considerable  importance.  As  long,  he  said,  as 
there  was  any  hope  of  seeing  an  international  agreement  his 
government  would  hesitate  to  modify  its  system;  but,  if  this 
conference  should  arrive  at  no  conclusion,  India  would  be 
obliged  to  act,  though  the  adoption  of  the  gold  standard  would 
be  fraught  with  difficulties.  The  most  satisfactory  solution 
for  India  would  be  the  adoption  of  international  bimetallism, 
in  which  she  would  join  the  Latin  Union  and  the  United 
States.  If  the  conference  adopted  a  plan  rendering  probable 
the  maintenance  of  a  relative  stability  in  the  price  of  silver,  it 
was  not  likely  that  his  government  would  close  its  mints  to 
silver  even  if  the  plan  should  meet  with  only  partial,  but 
sufficiently  important,  adhesion;  "the  government  of  India, 
without  relinquishing  its  liberty  of  action,  would  be  disposed 
to  buy  silver,  or  to  permit  the  coinage  of  a  fixed  quantity  of 
silver,  not  less  than  fifty  million  rupees  a  year,  during  the 
entire  duration  of  the  agreement." 

The  committee  then  proceeded  to  examine  the  Eothschild 
plan.  From  a  theoretical  point  of  view  the  principal  argu- 
ment advanced  by  the  opponents  of  the  plan  was  that  the 
intervention  of  a  buyer,  endeavoring  to  influence  the  market, 
would  be  in  conflict  with  the  economic  law  which  lays  down 
that  the  natural  la\vs  overpower,  sooner  or  later,  all  attempts 


CONSIDERATION  OF  ROTHSCHILD'S  PROPOSITION  391 

of  an  artificial  character.  The  partisans  of  the  plan  conceded 
that  an  intervention,  such  as  that  proposed,  would  be  danger- 
ous unless  it  were  limited  in  the  length  or  importance  of  the 
engagements  to  be  undertaken.  But  with  a  duration  of  five 
years,  and  with  a  maximum  limit  to  the  purchases  to  be  made, 
the  moral  effect,  they  said,  should  be  considered.  Monetary 
policy  in  regard  to  silver  would  be  settled  for  five  years,  and 
besides  this  agreement  of  European  nations,  there  would  be 
the  certainty  of  seeing  the  United  States,  Mexico,  and  the 
Indies  remaining  faithful  to  the  existing  line  of  conduct. 

Touching  upon  practical  ground,  it  was  asked  whether  the 
experiment  had  not  already  been  made  under  more  favorable 
conditions.  The  coinage  and  purchases  of  the  United  States 
were  cited  and  attention  called  to  the  fact  that  they  added 
more  to  the  annual  demand  than  would  be  added  on  the  part 
of  Europe  by  the  Rothschild  plan.  Nevertheless,  with  the 
exception  of  the  rise  in  1890  —  a  rise  resulting  from  the  ebulli- 
tion of  speculation  which  thought  its  risks  limited  —  the  price 
of  silver  in  London  had  not  ceased  to  fall.  It  was  urged  that 
Europe,  without  any  preconcerted  agreement,  had  absorbed  in 
the  three  years  from  1889  to  1892  more  than  300,000,000 
francs  for  the  needs  of  its  coinage,  and  that,  nevertheless,  the 
price  had  fallen. 

In  reply,  Rothschild  claimed  that  the  experience  of  Amer- 
ica was  not  conclusive,  as,  since  1878,  the  political  opinion  in 
the  United  States  had  been  essentially  changeable,  oscillating 
between  the  prospect  of  free  coinage  and  that  of  the  cessation 
of  Treasury  purchases,  while  Europe  held  aloof  in  an  attitude 
which  wras  merely  expectant,  if  not  actively  hostile  to  the  white 
metal,  and,  therefore,  tending  to  discredit  it  still  further.  The 
suggested  experiment  would,  he  said,  be  made  in  entirely  differ- 
ent conditions,  since  it  would  imply  an  accord  of  all  united 
interests.  It  was  true  that  the  European  countries  which 
would  become  purchasers  of  the  metal  were  not  all  in  an  iden- 


392  THE  CONFERENCE  OF  1892 

tical  situation.  There  were  some  which,  could  easily  add  each 
year  a  certain  quantity  of  silver  to  their  circulation,  but  there 
were  others  which  already  had  a  more  than  sufficient  stock  of 
white  metal.  For  the  latter  a  certain  compensation  for  possi- 
ble sacrifices  might  be  found  in  the  stability  of  its  value,  in  the 
arrest  of  its  fall,  and,  perhaps,  also  in  the  conditions  of  greater 
security  in  international  trade,  and  in  the  greater  facility  of  ex- 
changes. 

In  the  course  of  the  committee's  discussion  it  became  ap- 
parent that  the  United  States  would  only  consent,  if  at  all,  to 
such  an  agreement  with  Europe  by  being  assured  that  the 
newly  bought  silver  would  be  used  as  money.  There  was  con- 
siderable difference  of  opinion  as  to  how  the  silver  should  be 
purchased  and  as  to  the  quantity.  The  United  States  delegate 
was  quick  to  point  out  the  unfairness  of  expecting  his  govern- 
ment to  purchase  so  much  more  heavily  than  all  Europe  to- 
gether at  the  market  price,  whereas  Europe  was  never  to  pay 
more  than  43  pence  per  ounce;  but  the  European  delegates 
were  in  no  mood  to  obligate  their  governments  to  purchase  any 
greater  quantity  than  absolutely  necessary,  though  the  amount 
was  finally  arranged  provisionally  at  30,000,000  ounces,  or  a 
little  more  than  Rothschild  had  originally  suggested.  As 
finally  modified  by  the  committee  the  proposal  was  as  follows : 

"  1.  The  European  states  which  agree  upon  the  basis  of  this 
proposal  will  buy  each  year  30.000,000  ounces  of  silver,  on  condi- 
tion that  the  United  States  agree  to  continue  their  present  pur- 
chases, and  that  unlimited  free  coinage  be  maintained  in  British 
India  and  Mexico. 

"  2.  The  proportion  of  the  purchase  to  be  made  by  each  country 
will  be  determined  by  agreement  between  them. 

"  3.  The  purchases  will  be  made  at  will  and  in  the  manner  pre- 
ferred by  each  government. 

"  4.  These  amounts  of  silver  will  be  devoted  in  each  country 
to  the  monetary  uses  authorized  by  the  legislation  of  that  state;  at 
the  will  of  each  government,  the  silver  will  be  either  coined  or  made 
the  guarantee  for  the  issue  of  ordinary  or  special  notes. 

"  5.  The  arrangement  will  be  made  for  five  years.  The  obliga- 
tory purchase  of  silver  will  be  suspended  should  the  metal  reach,  in 
the  London  market,  a  price  determined  by  agreement  of  the  govern- 
ments. The  purchases  may  be  resumed  if  the  delegates  of  the  dif- 


THE  SOETBEER  PLAN  393 

fereut  countries  interested  should  agree  upon  the  fixing  of  a  new 
limit  of  price.  They  should  be  resumed  ill  any  case  if  the  price 
falls  below  the  original  limit." 

The  Soetbeer  plan  appeared  to  the  committee  too  compli- 
cated to  offer  a  practical  basis  for  an  agreement.  The  great 
German  monetary  expert,  who  had  been  one  of  the  leading  in- 
tellectual forces  in  the  accomplishment  of  the  monetary  re- 
form of  his  country,  through  his  investigations  in  later  years, 
became  fully  impressed  with  the  difficulties  raised  by  the  scar- 
city of  gold,  and  shortly  before  his  death,  when  bimetallism  ap- 
peared to  be  making  great  headway  in  the  German  empire, 
he  published  a  plan  for  an  international  agreement  which  had 
for  its  basis  the  acknowledgment  of  a  fixed  weight  of  pure  gold 
as  a  universal  and  sole  foundation  and  normal  measure  of  cur- 
rency, and  the  maintenance  in  the  several  states  of  the  existing 
gold  currency,  subject  to  an  agreement  that  in  the  future  no 
gold  coins  should  be  issued  containing  less  gold  than  the  20- 
franc  piece,  and  that  all  previously  coined  pieces  of  less  value 
should  be  placed  out  of  circulation  within  ten  years.  It  pro- 
vided, further,  for  the  redemption  of  all  bank  notes  and  other 
paper  currency  tokens  of  a  value  less  than  20  francs  within 
ten  years,  and  the  obligation  not  to  issue  any  currency  tokens 
of  less  denomination  based  on  gold;  the  redemption  within 
fifteen  years  of  all  previously  coined  silver  of  a  higher  nominal 
value  than  10  per  cent,  of  the  value  of  the  future  lowest  gold 
coin,  the  minting  of  all  larger  silver  coins  to  be  at  the  ratio 
of  20  to  1  and  only  on  government  account.  Each  government 
would,  however,  be  obligated  to  accept  at  its  public  treasuries 
these  "  major  "  silver  coins  to  any  amount,  and  private  persons 
to  the  amount  of  three  times  the  full  value  of  the  lowest  gold 
coin.  There  were  provisions,  also,  for  the  issue  of  certificates 
against  these  coins.  It  was,  in  short,  a  plan  for  a  general  gold 
standard  with  a  larger  use  of  silver  at  the  ratio  of  20  to  1 ;  the 
ideal,  under  existing  circumstances,  of  the  theoretical  gold 
monometallism  It  involved  extensive  recoinage,  and  many 


394  THE  CONFERENCE  OF  1892 

problems  which  practical  men  would  not  think  of  facing,  at 
least  to  leave  silver  where  it  already  was,  in  a  subsidiary  posi- 
tion. 

The  plan  of  Moritz  Levy,  already  described  in  the  chapter 
devoted  to  the  conference  of  1881,  was  much  simpler,  and  re- 
ceived considerable  attention  from  the  committee.  Objection 
was  made,  however,  that  the  cost  of  recoinage  would  be  too 
great,  that  the  withdrawal  of  small  gold  pieces  would  be  un- 
popular in  some  states,  and  the  difficulty  of  withdrawing  small 
notes  great  in  many  states.  The  committee  finally  decided  to 
submit  the  proposal  to  the  conference  in  this  shape : 

I.  The  withdrawal  from  circulation  within  a  period  of 
-  of  gold  coins  containing  a  weight  of  less  than  5.806 

grains  of  fine  gold  (20-franc  pieces). 

II.  The  withdrawal  of  notes  of  less  value  than  the  coin  of 
20  francs  or  its  equivalent,  an  exception  being  made  of  notes 
representing  a  deposit  of  silver. 

A  decided  majority  of  the  committee  preferred  the  Levy 
plan  to  Rothschild's,  but  the  British  delegate  said  he  could  not 
recommend  it  to  his  government  unless  it  were  joined  with 
some  policy  like  that  of  Rothschild,  and  an  attempt  was  made, 
therefore,  to  modify  the  latter  plan  by  the  use  of  some  of  the 
provisions  of  the  Levy  scheme ;  but  the  representatives  of  the 
Latin  Union  were  plainly  determined  that  their  governments 
should  purchase  no  more  silver,  and  would  not,  therefore,  agree 
to  the  principle  of  the  Rothschild  proposal ;  they  even  went  so 
far  as  to  offer  a  formal  motion  that  if  such  a  plan  were  adopted 
by  the  conference  they  could  not  recommend  it  at  home,  and 
it  passed  the  committee  by  seven  votes  against  six,  the  repre- 
sentatives of  Sweden,  Denmark,  and  Russia  joining  those  of 
the  Latin  Union  to  support  it.  Two  of  the  six  who  thought 
well  enough  of  the  plan  to  agree  to  recommend  it  to  their 
governments  were,  of  course,  Fremantle,  of  England,  and 
Molesworth,  of  India.  The  others  were  Cannon,  of  the  United 


CONSIDERATION  OF  THE  LEVY  PLAN  395 

States,  Van  den  Berg,  of  the  Netherlands,  Casasus,  of  Mexico, 
and  Osma,  of  Spain.  The  position  taken  by  France  is  one  of 
the  curiosities  of  this  conference.  In  1881  she  was  ready  and 
eager  to  enter  into  an  agreement  to  coin  silver  without  limit; 
in  1892  she  would  enter  into  no  agreement  that  would  require 
her  to  coin  any  at  all.  But  her  delegates  were  willing  to  rec- 
ommend to  their  government  the  Levy  plan,  which  she  had 
barely  noticed  when  it  was  presented  in  1881,  and  which  was 
scorned  by  the  bimetallists  then  as  a  half-measure.  A  large  ma- 
jority of  the  committee  of  inquiry  favoring  the  Levy  plan,  it 
accordingly  came  before  the  conference  when  it  re-assembled 
on  December  2  as  the  only  one  affording  any  hopes  of  prac- 
tical results. 

When  the  debate  upon  the  report  was  opened,  Boissevain, 
of  the  Netherlands,  said  that  it  left  the  conference  face  to 
face  with  the  last  proposals  of  the  United  States,  international 
bimetallism.  The  Rothschild  plan  had  been  improved,  but 
the  majority  of  the  committee  could  not  recommend  it  to  their 
governments.  The  Levy  plan  was  left,  to  be  sure,  "  but,"  asked 
Boissevain,  "  is  there  any  one  so  bold  as  to  flatter  himself  that 
measures  such  as  these  could  remedy  the  situation  in  a  really 
efficacious  manner?  I  believe,  gentlemen,  that  we  must  admit 
that  just  as  the  conference  of  1881  failed  to  find  the  means  of 
overcoming  the  difficulties  of  the  situation  by  the  measures 
which  it  had  in  view  at  the  time  of  its  adjournment,  so  we 
have  been  now  vainly  ensnared  by  the  hope  that  we  should 
find  in  palliatives  the  means  of  arriving  at  an  understanding 
between  bimetallists  and  monometallists,  which  would  satisfy, 
at  least,  the  most  urgent  needs  of  the  present  time." 

The  delegates  seemed  to  assume  that  the  committee  had 
done  all  with  the  Rothschild  plan  that  could  be  done;  regrets 
were  expressed  that  it  could  not  have  been  modified  into  a 
form  promising  practical  results,  but,  instead  of  attempting 
to  do  what  the  committee  had  not  done,  the  conference  took 


396  THE  CONFERENCE  OF  1892 

it  as  it  was,  and  so,  of  course,  it  amounted  to  nothing.  General 
Strachey,  after  reviewing  the  situation  in  India,  said  that  its 
delegates  would  not  be  able  to  associate  themselves  with  any 
proposal  unless  of  a  distinctly  practical  character,  and  that 
would  exclude  all  measures  which  failed  to  receive  the  support 
of  enough  countries  of  financial  importance  to  give  reasonable 
assurance  of  their  becoming  really  effective.  For  this  reason 
he  feared  it  would  be  impossible  for  him  to  recommend  to  his 
government,  as  he  had  hoped  he  might,  the  proposal  of  Roths- 
child. He  wished  the  delegates  could  look  more  favorably 
upon  it. 

The  bimetallic  delegate  from  ^Belgium,  Allard,  severely 
criticised  the  conclusions  which  Rothschild  had  advanced  in 
behalf  of  the  gold  standard  for  England,  quoted  many  emi- 
nent Englishmen  to  show  that  the  system  had  been  in  many 
ways  disastrous  to  their  country,  reminded  Rothschild  that  the 
monometallic  Bank  of  England,  of  which  he  was  a  director, 
had  been  compelled  to  appeal  for  the  third  time  to  the  bimetal- 
lic Bank  of  France  to  be  saved  from  a  crisis,  and  said  that  the 
key  to  the  unfortunate  situation  was  in  England,  and  her 
delegates  should  turn  to  their  government  and  endeavor  to  ob- 
tain better  terms  than  Rothschild  had  offered,  and  which  he 
considered  would  be  entirely  inadequate  for  the  existing  condi- 
tion of  things.  He  had  no  faith  in  silver  purchases  anyway. 
If  a  terrible  monetary  panic  should  follow  a  further  and  sudden 
fall  of  silver  due  to  the  breaking  up  of  the  conference  without 
arriving  at  any  definite  result,  as  Rothschild  had  predicted  in 
urging  his  plan,  it  would  appear  first  at  the  doors  of  the  Bank 
of  England,  and  it  was,  therefore,  for  England  to  come  for- 
ward with  some  proposition  that  would  effect  a  real  remedy. 

Bertram  Currie  represented  the  stanch  and  complacent 
gold  monometallists  of  England.  He  held  that  there  was 
enough  gold  in  the  world,  and  that  matters  would  arrange 
themselves  if  they  were  allowed  to  take  their  own  course,  un- 


THE  CONFERENCE  IN  AN  ABSURD  POSITION  397 

obstructed  by  artificial  devices,  and  if  the  nations  kept  their 
finances  in  sound  condition,  the  real  desideratum  being  the 
maintenance  of  a  surplus  of  revenue  over  expenditure.  Such 
a  surplus,  he  claimed,  would  command  gold,  and  if  any  remedy 
were  needed,  it  was  a  gold  standard  even  without  a  gold  cur- 
rency. 

When  the  debate  had  proceeded  thus  far,  Senator  Allison 
asked  that  the  conference  adjourn  till  the  6th,  as  the  delegates 
of  the  United  States  had  not  been  able  to  make  themselves 
thoroughly  acquainted  with  the  report  of  the  committee,  and 
as  the  debate  had  taken  a  wide  range  as  to  principles  which 
they  would  be  ready  to  discuss  if  the  conference  considered 
that  it  had  arrived  at  that  point  where  the  consideration  of 
subsidiary  proposals  gave  promise  of  no  results.  They  had 
asked  for  the  consideration  of  these  plans  first  to  ascertain  the 
views  of  the  different  states,  and  to  learn  how  far  they  would 
go  in  the  enlarged  use  of  silver,  in  case  they  would  not  adopt 
the  plan  of  general  bimetallism.  The  wish  of  Senator  Allison 
was  acceded  to,  but  one  cannot  fail  to  notice  the  curious,  al- 
most ridiculous,  position  in  which  the  conference  appeared  to 
be  placed.  It  had  been  found  that  some  of  the  nations  would 
not  go  so  far  as  the  Rothschild  plan  implied  in  the  use  of  silver, 
and  yet  it  was  proposed  to  enter  as  a  last  resort  upon  the  consid- 
eration of  a  plan  to  go  further.  In  reality,  however,  the  discus- 
sion of  bimetallism  was  in  the  nature  of  a  pastime.  Other  sub- 
sidiary devices  had  been  submitted,  and  the  committee  of  in- 
quiry had  still  to  report  on  these. 

One  feature  of  the  declaration  of  the  Mexican  delegates 
made  at  the  fourth  session  deserves  notice.  Their  government 
did  not  appear  in  the  role  of  a  supplicant  for  relief;  indeed, 
they  implied  that  Europe  was  most  interested  in  preventing 
the  decline  in  the  price  of  silver,  although  Mexico  was  one  of 
the  large  producers,  and  though  silver  had  been  for  centuries 
her  chief  article  of  export.  The  explanation  of  this  may  be 


398  THE  CONFERENCE  OF  1892 

found  in  the  following  statement  taken  from  their  declara- 
tion: 

"  The  depreciation  of  silver  as  it  has  appeared  to  foreign  coun- 
tries —  for  in  our  own  country  values  have  not  perceptibly  changed 
—  has  produced  an  actual  premium  on  exportation.  Articles  which 
were  not  exported  formerly  are  sold  now  in  the  markets  of  Europe 
and  the  United  States  at  a  loss  of  8,  10,  or  15  per  cent,  on  the  cost 
of  their  production  and  the  expenses  incurred,  because  compensa- 
tion is  found  in  the  gain  in  exchange  of  25  or  30  per  cent.,  corres- 
ponding to  the  depreciation  of  silver,  and  for  this  reason  the  export 
of  articles,  other  than  silver,  has  risen  from  $6,000,000,  in  1873,  to 
$27,000,000,  in  1891.  In  view  of  these  results  we  have  reason  to  be- 
lieve that,  after  a  few  years,  we  shall  be  able  to  pay  the  value  of 
our  foreign  imports  in  produce  of  the  country  and  in  raw  material, 
and,  perhaps,  even  more  than  this;  and  that  our  silver,  of  which 
the  present  production  is  40,000,000  piasters  a  year,  will  disappear 
from  the  European  markets." 

At  the  beginning  of  the  fifth  session,  Sir  Rivers  Wilson 
stated  the  position  of  Sir  Charles  Fremantle  and  himself.    The 
peculiar  thing  about  the  British  delegation  in  this  conference 
was  that  it  ran  the  whole  gamut  of  monetary  science.    Currie 
was  a  monometallist  who  could  see  no  evils  in  the  situation  and 
conceived  the  gold  standard  to  be  the  best  system  for  all  na- 
tions, while,  on  the  other  extreme,  there  was  Sir  "William 
Houldsworth,  who  accepted  all  the  principles  and  arguments 
of  bimetallism  and  desired  its  general  introduction.     Between 
them  were  Wilson,  Fremantle,  and  Rothschild,  all  of  whom 
held  that  the  gold  standard  was  necessary  to  their  country,  but 
they  admitted  that  there  were  serious  evils  in  the  existing 
situation,  and  were  either  willing  or  anxious  that  some  practi- 
cal plan  of  relief  should  be  devised  without  any  sacrifice  of 
their  monometallic  principles.    It  was  not  enough,  said  Wil- 
son, that  the  plan  should  be  defensible  in  principle,  though 
that  was  necessary;  it  must  meet  with  such  a  preponderance  of 
support  as  would  justify  them  in  recommending  it  to  their 
government  for  consideration.     The  Rothschild  plan  had  not 
met  with  that  support,  and  it  would,  therefore,  be  useless  for 
them  to  discuss  it,  and  it  would  be  equally  useless  to  discuss  the 
Levy  plan,  for  their  government  would  be  unwilling  to  submit 


ROTHSCHILD  WITHDRAWS  HIS  PLAN  399 

to  the  inconvenience  of  so  extensive  a  withdrawal  of  its  gold 
coinage  unless  it  were  coupled  with  features  which  would 
plainly  make  it  for  their  advantage  to  do  so.  England  must, 
therefore,  await  other  plans. 

Although  Cannon  had,  by  his  vote  in  the  committee,  prac- 
tically declared  his  willingness  to  recommend  the  Rothschild 
plan  to  the  government  of  the  United  States,  others  in  our 
delegation  were  evidently  unwilling  to  go  so  far.  McCreary 
followed  Wilson  with  a  speech  in  which  he  said  that  he  could 
not  support  the  plan,  giving  his  reasons  very  plainly  and  pre- 
dicting that,  if  the  conference  came  to  no  result,  the  silver-pur- 
chase act  would  be  quickly  repealed  by  Congress.  Upon  this 
Rothschild  withdrew  his  plan  from  the  conference  with  the 
statement  that,  although  he  had  not  shown  it  to  the  delegates  of 
the  United  States  beforehand,  he  had  believed  it  would  be  sat- 
isfactory to  them. 

Xo  other  palliative  remained  to  be  discussed  except  that  of 
Levy,  and  the  debate  which  followed  treated  less  of  its  features 
than  of  general  principles.  Van  den  Berg,  of  Holland,  one  of 
the  ablest  and  most  experienced  financiers  in  the  conference, 
spoke  earnestly  for  bimetallism,  and  was  followed  by  Sir 
"William  Houldsworth,  who  attacked  the  arguments  of  his  col- 
league, Bertram  Currie,  and  said  that  he  considered  the  plan  of 
his  other  colleague,  Rothschild,  quite  inadequate  as  a  perma- 
nent remedy.  He  was  not,  however,  disposed  to  turn  his  back 
on  palliatives,  provided  they  were  not  accepted  as  remedies,  but 
were  applied  for  a  short  time  to  give  the  opportunity  to  work 
out  a  complete  and  enduring  solution.  Eighteen  months  would 
be  long  enough,  in  his  opinion,  to  try  a  plan  like  Rothschild's, 
and  then,  if  the  world  were  not  wise  enough  to  adopt  a  scientific 
monetary  system,  he  believed  the  logic  of  stern  events  would  in 
time  force  its  adoption.  Sir  Guilford  Molesworth,  of  British 
India,  made  an  exceedingly  able  speech  on  the  general  situa- 
tion in  its  relation  to  India,  and  said  that  the  only  satisfactory 


400  THE  CONFERENCE  OF  1892 

solution  for  his  government  under  the  circumstances  would  be 
a  bimetallic  agreement  between  India,  the  Latin  Union,  and 
the  United  States,  and  he  believed  that  it  would  be  strong 
enough  to  maintain  any  ratio  that  might  be  fixed.  He  could 
not  disguise  the  fact,  he  said,  that  the  adoption  by  India  of  the 
gold  standard  would  be  fraught  with  difficulties,  but  he  be- 
lieved it  would  be  more  disastrous  to  the  gold-using  countries  of 
Europe  than  to  India.  Like  Houldsworth,  he  ridiculed  the 
assertions  of  Currie,  that  the  gold  standard  had  produced  no 
troubles  for  England,  but  had  rather  built  up  her  commerce 
and  given  her  a  financial  supremacy,  and  he  cited  many  his- 
torical instances  to  prove  the  contrary  to  be  true. 

The  general  discussion  of  bimetallism  was  continued  to  the 
tenth  and  last  session,  while  the  committee  were  considering 
other  plans  which  had  been  submitted.  It  was  an  exceedingly 
able  and  exhaustive  debate,  the  chief  participants  being  Sena- 
tor Jones,  whose  comprehensive  review  of  the  subject  occupied 
much  of  two  sessions,  Houldsworth,  of  England,  Molesworth, 
of  British  India,  Boissevain  and  Van  den  Berg,  of  Holland, 
Allard  and  Weber,  of  Belgium,  Forssell,  of  Sweden,  and 
Tirard,  of  France.  The  chief  addresses  on  the  gold  side  were 
those  of  Weber  and  Forssell.  The  former  endeavored  espe- 
cially to  meet  the  arguments  of  those  who  claimed  with  un- 
abated persistence  that  the  fall  of  prices  was  due  entirely  to 
the  scarcity  of  metallic  money.  He  held  that  the  forced  cir- 
culation of  silver  would  be  iniquitous  from  whatever  stand- 
point regarded,  and  that,  in  seeking  for  industrial  and  com- 
mercial expansion  by  international  means,  the  nations  must 
look  to  the  custom-houses  and  not  to  the  mint.  No  one,  he  said, 
could  calculate  the  loss  that  would  accrue  to  the  next  genera- 
tion from  an  international  agreement  on  bimetallism.  Who 
would  dare  to  prophesy  the  condition  of  international  affairs, 
the  condition  of  Europe  and  of  the  world,  when  the  term  of  the 
international  monetary  convention  ran  out?  Which  nations 


THE  ARGUMENT  OP  THE  MONOMETALLISTS  401 

would  have  an  interest  in  demanding  from  the  others  the  re- 
demption of  the  coins  bearing  their  distinctive  stamp?  After 
twenty  or  twenty-five  years,  the  probable  period  of  such  an 
arrangement,  who  would  be  the  creditors,  and  who  the  debt- 
ors ?  Xo  one,  he  said,  could  tell ;  but  they  could,  in  his  opinion, 
be  sure  of  one  thing,  that  there  would  be  a  surfeit  of  money,  a 
formidable  inflation  of  silver  currency,  and  that  it,  would  have 
all  been  brought  about  for  the  sole  purpose  of  digging  up  silver 
in  America  and  elsewhere,  and  bringing  it  to  Europe  to  bury 
it  again  in  the  vaults  of  the  banks  of  issue. 

The  proposal  for  an  international  bimetallic  agreement, 
said  Forssell,  was  audacious  far  above  the  vulgar  prejudices  of 
the  time.  "  Everybody  distrusts  silver  coin,  of  which  there  is 
evidently  more  than  is  necessary;  everybody,  therefore,  seeks 
to  keep  his  gold,  which  seems  scarcely  sufficient  for  its  needs; 
and  it  is  at  this  moment  that  everybody  is  asked  to  agree  by 
international  contract  to  coin  this  disliked  silver  in  unlimited 
quantities  while  remaining  free  to  get  and  to  keep  gold,  each 
as  best  he  may."  He  claimed  that  the  actual  ratio  between 
the  two  metals  had  never,  and  nowhere,  been  invariably  in 
accord  with  the  legal  ratio,  and  that,  after  such  an  experience 
the  resort  to  the  hypothetical  project  of  international  bimetal- 
lism was  an  attack  on  reason.  The  problem  of  a  union  suffi- 
cient to  guarantee  against  a  premium  on  gold  was  like  the 
question  "  What  length,  what  breadth,  and  what  capacity 
should  be  given  in  order  to  best  contain  a  certain  quantity  of 
liquid  in  a  hogshead  of  which  there  is  no  possibility  of  stopping 
the  bunghole?"  In  conclusion  he  said: 

"  The  states  of  the  Latin  Union,  and  especially  Belgium,  can  tell 
us  something  of  the  practical  side  of  the  question.  Those  states 
entered  one  fine  day  full  of  international  confidence  under  the 
magnificent  arches  of  the  bimetallic  system  supported  by  pillars  of 
gold  and  silver  ranged  in  a  pre-established  harmony  of  15^.  But 
the  harmony  was  disturbed,  silver  fell,  the  white  pillars  were  trans- 
formed into  walls  which  barred  the  outlet,  and  they  were  im- 
prisoned. In  prison,  tempers  are  easily  soured,  and  the  Latin  Union 
states  no  longer  bless  the  treaty  of  18G5.  How  can  it  be  desired  that 
26 


402  THE  CONFERENCE  OF  1893 

the  European  states,  with  eyes  opened  by  these  experiences,  should 
willingly  enter  into  an  international  engagement  from  which  there 
would  be  no  retreat?  If  the  conference  of  Brussels  contributes  to 
establish  and  fortify  the  conviction,  which  is  already  very  general, 
that  an  international  agreement  for  the  free  and  unlimited  coinage 
of  silver  as  full  legal-tender  money  Is  not  orly  rejected  for  the 
moment,  but  inadmissible  for  the  future,  it  will  have  reached  a 
very  important  result.  It  will  then  have  destroyed  the  vain  and 
sterile  illusions  which  have  already  too  long  troubled  men's  minds 
and  turned  them  from  the  reality  of  facts  towards  the  dream  of  an 
unrealizable  Utopia." 

The  bimetallic  arguments  were  stated  with,  equal  force 
and  ability.  It  was  held  that  bimetallism  was  in  scientific  ac- 
cord with  the  law  of  supply  and  demand,  and  that  a  league  of 
strong  nations  could  fix  the  relation  of  supply  and  demand  it- 
self; that  prices  had  fallen  because  of  the  appreciation  of  gold, 
and  that  there  had  really  been  no  overproduction  of  silver. 
The  fact  that  monometallists  no  longer  advocated  the  demone- 
tization of  silver  everywhere  they  claimed  to  be  a  recognition 
of  the  paucity  of  gold  available  for  money,  and  they  asserted 
without  contradiction  that  gold  monometallism  could  not  be 
maintained  permanently  anywhere,  unless  it  was  everywhere, 
for  commerce  would  not  always  tolerate  one  money  for  the 
East  and  another  for  the  West.  The  conflict  for  gold,  if  not 
paired  with  silver,  would  be  irrepressible  and  more  and  more 
bitter. 

There  was  some  disposition  among  the  monometallists  to 
allege  that  bimetallism  had  strong  aifinities  for  protection  by 
customs  tariff,  but  the  bimetallists  claimed  that  some  of  the 
strongest  foes  of  bimetallism  were  protectionists  and  many  of 
its  chief  advocates  free-traders.  Only  once  in  the  debate  was 
the  question  as  to  what  should  be  the  fixed  ratio  between  gold 
and  silver,  in  case  of  an  international  agreement,  touched  upon. 
It  was  raised  by  Forssell,  possibly  in  the  belief  that  it  would 
engender  a  dispute  between  the  advocates  of  bimetallism,  and 
thus  prevent  their  rather  severe  charges  against  monometal- 
lism. Senator  Allison  quickly  set  aside  the  question  by  saying 
that  while  it  was  a  fundamental  one,  it  was  the  last  to  be  con- 


REPORT  UPON  OTHER  PLANS  403 

sidered;  the  question  of  how  many  states  would  enter  into  an 
agreement  must  naturally  come  first.  If  not  enough  states 
were  ready,  the  discussion  of  the  ratio  would  be  a  waste  of 
time.  He  stated,  however,  that  if  the  general  opinion  seemed 
to  be  in  favor  of  the  adoption  of  the  ratio  of  15.50  to  1,  he 
thought  his  government  would  agree  to  it. 

Curiously  enough,  the  old  question  which  was  the  motive 
of  the  conference  of  18 07  was  suggested  by  one  delegate,  Ben- 
gesco,  of  Roumania,  though  the  suggestion  fell  flat.  His 
idea  was  that  while  an  international  agreement  as  to  the  mat- 
ters presented  by  the  United  States  appeared  to  be  impossible, 
one  might  be  easily  arranged  on  the  optional  coinage  and  ob- 
ligatory circulation  in  each  country  of  gold  pieces  equivalent  to 
25  francs. 

Both  before  and  during  the  debate  on  bimetallism  the 
British  delegates  had  asserted  that  England  could  not  adopt 
such  a  system,  and  Germany  and  Austria  practically  stated 
that  they  could  not  unless  England  did.  The  latter  was  really 
the  attitude  of  France  also,  though  her  delegates  protested  that 
they  were  as  friendly  as  ever  to  silver;  but  France  had  too 
much  to  permit  it  to  consider  any  proposition  to  enter  into 
an  agreement  to  coin  more  unless  under  a  general  bimetallic 
agreement.  Tirard  said  that,  if  the  Rothschild  plan  was  to 
be  adopted,  he  had  no  doubt  that  France,  which  had  so  much 
silver,  would  be  expected  by  England,  which  had  very  little, 
to  buy  the  greater  part  of  Europe's  share.  In  this  situation 
it  would  have  been  useless  for  the  United  States  delegates  to 
have  urged  a  vote  on  the  question  of  adopting  bimetallism. 
Xeither  side  seemed  to  wish  it.  Neither  was  there  a  vote  upon 
the  Levy  proposition. 

At  the  tenth  session  the  conference  took  up  the  report  of 
the  committee  on  the  six  other  plans  which  had  in  the  mean- 
time been  submitted  to  its  consideration.  The  first  of  these, 
that  of  Tietgen,  of  Denmark,  proposed  the  free  coinage  of 


404  THE  CONFERENCE  OF  1892 

silver  at  a  ratio  to  gold  as  near  as  possible  to  that  of  bullion  in 
the  market,  the  coins  to  be  full  legal  tender,  and  to  circulate  in- 
ternationally, each  state  being  bound  to  redeem  its  own  in  gold. 
The  possibility  of  establishing  in  the  banks  of  issue  by  this 
plan  a  sort  of  metallic  credit  upon  foreign  countries,  which 
might  in  times  of  crisis  serve  to  some  extent  to  protect  the  gold 
reserve,  very  favorably  impressed  the  committee,  but  the  feat- 
ure of  recoinage  of  silver  money  was  objectionable  to  some. 
Tietgen  withdrew  this  part  of  it,  but,  being  compelled  to  re- 
turn home,  the  plan  was  dropped. 

Sir  William  Houldsworth  presented  a  plan  based  upon  a 
project  prepared  by  Huskisson  in  1826,  for  the  consideration 
of  the  British  government,  and  which,  presupposing  bimetal- 
lism in  one  or  more  states,  was  intended  to  guarantee  the  suc- 
cess of  this  through  the  adoption  by  other  states  of  some  means 
short  of  bimetallism.  The  gold  states  would  receive  silver 
bullion,  issuing  therefor  certificates,  each  naming  the  gold 
value  of  the  silver  at  the  date  of  deposit,  circulating  as  legal 
tender  in  all  transactions,  and  redeemable  each  in  the  weight 
of  silver  for  which  it  was  issued.  If  silver  rose,  the  holder 
would  gain ;  if  it  fell,  he  would  lose.  It  was  found  that  certain 
countries  would  not  enter  into  such  an  arrangement  with  this 
legal-tender  feature,  fearing  that  if  the  bimetallic  union  should 
break  up,  the  notes  would  become  depreciated;  but  Houlds- 
worth considered  the  legal-tender  feature  essential  to  the  plan, 
and  so  the  committee  dropped  that  also. 

Allard,  of  Belgium,  proposed  an  international  application 
of  the  recommendation  made  by  Secretary  "VVindom  in  1889, 
a  plan  under  which  the  governments,  instead  of  the  holders  of 
the  certificates,  would  gain  or  lose  from  the  fluctuations  in  the 
price  of  silver.  Allard  proposed  that  the  issuing  states  form 
a  group  and  bear  the  loss  in  common,  in  a  proportion  to  be 
determined,  in  case  silver  depreciated;  but  serious  objections 
were  raised  to  it,  and  the  committee  regarded  the  efficiency  of 


A  PROROGATION  DESIRED  405 

the  remedy  as  doubtful.  Foville  advocated  international  legis- 
lation, favoring  the  practice  of  the  deposit  of  silver  bullion  in 
the  mints  and  great  banks  with  certificates  of  deposit  or  com- 
mercial warrants,  but  not  legal  tender  nor  guaranteed  by  the 
governments.  Forssell,  of  Sweden,  with  the  purpose  of  show- 
ing the  benefit  that  might  be  expected  from  an  international 
agreement  for  improving  the  conditions  of  gold  circulation  and 
diminishing  the  frequent  transfers  of  gold  from  one  bank  to 
another,  proposed  the  compact  already  in  force  between  the 
banks  of  Sweden,  ISTorway,  and  Denmark.  Each  of  these 
banks  has  an  account  with  each  of  the  others,  a  check  being 
honored  by  the  drawee  bank  even  when  the  bank  drawing  it 
happens  to  have  no  cash  on  deposit  with  the  drawee.  Levi  and 
Sainctelette  proposed  that  mints  and  government  banks  should 
receive  "  twin  deposits,"  each  consisting  in  a  given  amount  of 
gold  and  a  given  amount  —  say,  twenty  times  as  much  in 
weight  —  of  silver,  issuing  for  each  such  twin  deposit  a  certifi- 
cate redeemable  only  in  the  exact  weight  of  gold  and  silver 
deposited.  The  United  States  member  of  the  committee  ob- 
jected to  the  various  plans  for  silver  warrants  on  the  ground 
that  they  would  create  floating  stocks  of  metal  without  a  mon- 
etary outlet,  and  that  they  would  be  subject  to  speculation. 
The  committee  decided  to  leave  the  questions  raised  by  all 
these  proposals  open  for  consideration  and  settlement  in  the 
conference,  so  its  whole  report  was  really  a  mere  exposition, 
which  at  best  could  only  serve  as  a  basis  for  investigation  by 
the  delegates  or  their  governments. 

But  a.  majority  of  the  conference  were  not  disposed  to  do 
any  more  work  at  that  time,  the  holidays  being  at  hand.  Most 
of  the  delegates  were  uncertain  as  to  the  manner  in  which 
their  governments  would  regard  the  various  propositions 
offered.  Some  wished  to  reassemble  early  in  January,  but 
more  considered  a  longer  recess  desirable,  to  enable  govern- 
ments to  consider  fully  the  various  measures  placed  before  the 


406  THE  CONFERENCE  OP  1892 

conference.     Accordingly,  at  the  tenth  session  Baron  di  Ren- 
zis,  of  Italy,  offered  the  following  resolution : 

"  The  International  Monetary  Conference,  recognizing  the  great 
value  of  the  arguments  which  have  been  developed  in  the  reports 
presented  and  in  the  discussions  at  the  meetings,  and  reserving  its 
liual  judgment  upon  the  subjects  proposed  for  its  examination,  ex- 
presses its  gratitude  to  the  government  of  the  United  States  for 
having  furnished  an  opportunity  for  a  fresh  study  of  the  present 
condition  of  silver. 

"  The  conference  suspends  its  labors  and  decides,  should  the 
governments  approve,  to  meet  again  the  30th  of  May,  1893.  It  ex- 
presses the  hope  that  during  the  interval  the  careful  study  of  the 
documents  submitted  to  the  conference  will  have  permitted  the  dis- 
covery of  an  equitable  basis  for  an  agreement,  which  shall  not  in- 
fringe in  any  way  the  fundamental  principles  of  the  monetary 
policy  of  the  different  countries." 

Baron  di  Renzis  supported  the  motion  in  a  speech  in  which 
he  predicted  that  definite  results  would  follow  a  reconvening 
of  the  conference  after  the  delegates  and  their  governments 
had  fully  examined  the  plans  which  had  been  submitted.  Sen- 
ator Allison  said  that,  as  it  had  been  quite  generally  admitted 
that  there  were  grave  dangers  in  the  situation,  and  as  it 
seemed  important  that  something  should  materialize,  he  would 
consider  it  wise  to  continue  the  deliberations,  but  a  short  ad- 
journment, at  least,  seemed  necessary,  and  he  quite  agreed 
with  the  suggestion  that  it  would  be  well  under  the  circum- 
stances to  allow  the  different  governments  time  for  considera- 
tion. The  only  opposition  to  the  course  came  from  the  purely 
monometallic  wing  of  the  British  delegation.  Bertram  Currie 
called  attention  to  the  fact  that  the  conference  of  1881  still 
remained  adjourned,  and  he  asked  what  prospect  the  confer- 
ence of  1892  would  have  of  a  speedier  reunion.  In  three  differ- 
ent conferences  the  nations  had  exhausted  their  ingenuity  in 
devising  plans  for  the  increase  of  silver  money,  and  he  thought 
the  time  had  arrived  when,  as  men  of  the  world,  or  men  of 
business,  they  should  recognize  that  the  task  was  impossible, 
that  it  was  wiser,  instead  of  postponing  the  decision,  to  declare 
plainly  to  the  advocates  of  bimetallism  that  their  plan  would 
be  no  cure  for  the  ills  of  which  they  complained,  so  that, 


DIVERSE  OPINIONS  IN  THE  ENGLISH  DELEGATION  407 

abandoning  vain  imaginings  and  illusive  visions,  which  could 
never  become  realities,  they  might  turn  their  attention  to  some 
possible  alleviations  of  their  distress.  He  considered  that  the 
malady  which  affected  them  was  political  rather  than  financial. 
Sir  Rivers  Wilson  made  a  somewhat  more  moderate  state- 
ment in  behalf  of  Fremantle,  Rothschild,  and  himself,  simply 
expressing  a  doubt  as  to  the  advantages  of  a  proposed  adjourn- 
ment. It  was  no  secret,  he  said,  that  the  English  government 
only  entered  upon  the  conference  with  hesitation,  and  it  was 
quite  possible  that  it  might  appear  to  that  government  un- 
necessary to  renew  the  mission.  If  the  meeting  of  the  confer- 
ence should  take  place  at  the  date  proposed,  he  thought  it 
could  have  no  other  purpose  than  the  examination  of  a  per- 
fectly practical  and  explicit  proposal  from  the  government  of 
the  United  States.  Sir  William  Houldsworth,  speaking  for 
himself,  denied  that  the  British  government  accepted  the  in- 
vitation to  the  conference  with  hesitation  or  reserve.  "  So  far 
from  any  reserves  being  placed  upon  us,"  he  said,  "  our  in- 
structions seem  to  me  of  the  freest  possible  kind.  They  even 
went  so  far  as  to  charge  us  to  study  with  the  greatest  care  any 
plan  that  might  be  submitted  for  our  consideration  before  com- 
ing to  the  conclusion  that  matters  must  be  left  as  they  are." 
Xor  did  he  agree  with  the  suggestion  of  his  colleague  that  the 
conference  should  not  meet  again  unless  to  consider  some  def- 
inite plan  put  forward  by  the  United  States.  "  I  trust  that  by 
next  May,"  he  said,  "  we  shall  have  more  light,  and  I  think  Mr. 
Currie  will  be  astonished  in  a  very  short  time  at  the  progress 
which  this  question  will  make  in  England  among  the  great 
masses  of  the  industrial  and  commercial  classes.  Of  course, 
the  bankers  of  England  and  the  government  may  remain  ob- 
stinate, but  I  do  not  think  that  the  people  of  England  will 
quietly  and  patiently  continue  to  suffer  from  the  dangers  and 
difficulties  which  they  are  now  enduring,  or  which  certainly 
will  come  upon  them  if  nothing  be  done.  The  delegates  from 


408  THE  CONFERENCE  OF  1892 

British  India  strongly  favored  the  adjournment  to  May;  the 
resolution  passed,  not  even  Currie  voting  against  it,  and  with 
the  usual  courtesies  the  delegates  of  the  conference  of  1892 
separated  never  to  reassemble.  In  the  course  of  a  month  they 
had  held  ten  long  sessions,  considered  as  many  different  plans 
for  increasing  the  use  of  silver  as  money,  redebated  the  ques- 
tion of  bimetallism,  and  taken  not  a  single  vote.  The  resolu- 
tion which  had  been  submitted  by  the  delegates  of  the  United 
States,  to  the  effect  that  a  larger  use  of  silver  as  money  was  de- 
sirable, remained  unacted  upon  among  the  papers  of  the  con- 
ference. 


CHAPTER  IX 

THE  COURSE  OF  MONETARY  EVENTS  SINCE  1893— THE  PRESENT  AND  THE 

FUTURE 

MAINLY  because  of  his  different  social  and  political  tradi- 
tions and  environment,  the  European  habitually  misappre- 
hends the  real  strength  and  the  saving  qualities  of  popular 
government  in  the  United  States.  "We,  on  the  other  hand, 
quite  as  commonly  and  as  naturally  misapprehend  the  peculi- 
arities of  European  civilization.  The  rigidity  of  financial  con- 
servatism in  England,  for  example,  is  underestimated  by  us, 
and  the  elasticity  manifested  by  public  sentiment  here,  the 
violent  swings  the  political  pendulum  sometimes  makes,  is  mis- 
construed abroad,  even  by  intelligent  and  acute  Englishmen. 
Seeing  us  for  the  moment  in  the  rapids,  they  are  led  to  think, 
as  did  Carlyle  thirty-five  years  ago,  that  we  must  consequently 
"  shoot  Niagara  to  the  bottom."  The  intelligent  American 
knows  that  the  powers  of  his  particular  form  of  government 
for  his  deliverance  develop  themselves  in  the  rapids,  and 
that,  the  very  forces  which  seem  to  threaten  his  destruction 
finally  co-operate  to  establish  him  on  safer  and  higher  ground 
than  he  before  held.  His  history  will  teach  him  this. 

Expensive  as  some  of  the  escapades  of  political  feeling  have 
been  in  this  country,  they  have  had  their  compensations  ulti- 
mately; and  a  strong  nation  has  been  developed,  a  people 
firmly  bound  together  by  a  loyalty  to  themselves  as  a  people 
with  a  rich  inheritance.  Serious  questions  have  gradually 
worked  themselves  out,  and  a  sounder  policy  has  frequently 
followed  in  the  trail  of  apparently  disastrous  outbreaks  of 
political  furor,  fed  and  fattened  by  demagoguery.  In  view  of 


410  THE  PRESENT  AND  THE  FUTURE 

the  European  misapprehension  of  our  political  phenomena,  it 
is  not  strange  that  governments  abroad  have  postponed  action 
in  the  face  of  their  own  urgent  situation  in  the  expectation  that 
the  United  States  would,  in  a  freak  of  indiscretion,  assume 
the  whole,  or  a  greater  part,  of  the  inconvenience  of  pulling 
their  chestnuts  out  of  the  fire.  Of  such  a  parentage  was  their 
attitude  of  expectancy  born.  In  the  light  of  the  history  re- 
lated in  the  preceding  chapters,  it  remains  simply  to  deal  with 
the  series  of  facts  characterizing  the  past  five  years,  and  which, 
though  important  and  striking,  are  so  familiar  to  most  readers 
as  to  require  only  brief  reference. 

The  conference  of  1892  adjourned  in  the  expectation  of 
reconvening  five  months  later,  because  none  of  the  govern- 
ments were  willing  to  let  the  matter  drop.  They  were  well 
aware  that  the  Silver  Question  had  been  brought  to  a  fork  in 
the  road,  and  that  something  important  must  soon  happen. 
Here  they  paused,  each  in  its  characteristic  attitude  of  ex- 
pectancy, England  assuming  to  await  some  definite  proposition 
from  the  United  States.  But  she  realized  that  something  must 
be  done  for  India  unless  the  United  States  continued  to  pur- 
chase silver  or  reopened  their  mints  to  it.  No  government 
would  have  congratulated  itself  more  sincerely  than  the  Eng- 
lish had  an  agreement  for  a  larger  use  of  silver  been  reached, 
and  it  doubtless  thought  that  the  silver  interest  in  the  United 
States  was  sufficiently  strong  to  compel  the  government  to,  at 
least,  come  forward  the  following  May  with  a  proposal  that 
would  require  England  to  do  no  more  than  her  delegates  had 
shown  a  willingness  to  do ;  and  the  almost  continual  agitation 
for  free  silver  in  Congress  and  in  the  West  kept  English  expec- 
tancy alive.  The  deficits  in  the  Indian  budget,  and  the  embar- 
rassments of  English  merchants  because  of  the  uncertain  rate 
of.  exchange,  and  the  fact  that  the  low  price  of  silver  gave 
Indian  merchants  a  marked  advantage  over  them  in  valuable 
Oriental  markets  would,  they  conceived,  vanish  like  the  mists 


CONDITIONS  UNDER  WHICH  THE  CONFERENCE  ADJOURNED        41 1 

of  the  morning  if  only  the  United  States  would  by  one  of  those 
threatening  sweeps  of  silver  feeling  provide  from  their  enor- 
mous resources  a  market  for  all  the  silver  their  mines  produced 
and  that  which,  possibly,  other  nations  would  cheerfully, 
under  the  circumstances,  discard. 

At  that  time,  as  the  English  statesmen  well  knew,  the  gov- 
ernment of  the  United  States,  with  a  mass  of  silver  in  circula- 
tion, faced  a  gold  reserve  scarcely  above  the  point  maintained 
as  necessary  for  the  redemption  of  the  "  greenbacks,"  and  this 
balance  was,  in  the  absence  of  any  premium  device  or  rate  of 
discount,  at  the  mercy  of  any  one  who  desired  gold  for  export 
or  hoarding.  "Would  the  United  States  dare  to  discontinue 
the  purchase  of  silver,  and,  thus  subjecting  their  silver  circu- 
lation to  a  serious  depreciation,  add  to  the  burden  resting  upon 
an  unprotected  reserve  ?  On  the  other  hand,  the  United 
States  might  with  as  much  reason  have  asked,  would  England 
dare  to  close  the  Indian  mints  which  for  years  had  absorbed 
silver,  thus  subjecting  an  enormous  and  sometimes  rebellious 
population,  habituated  to  silver  as  a  legal  tender,  always 
hoarding  it  as  the  main  evidence  of  wealth,  to  the  uncertainties 
of  an  artificial  and  possibly  inconvertible  currency  ?  While 
they  were  waiting,  these  questions  were  answered.  The  United 
States  became  frightened  over  the  gold  reserve,  and  under- 
took the  repeal  of  the  silver-purchase  act ;  England  took  steps 
to  close  the  Indian  mints. 

The  conference  adjourned  during  one  of  those  periods 
when  the  government  of  the  United  States  seldom  does  any- 
thing of  importance  • —  the  period  between  the  election  of  a 
new  president  and  his  inauguration ;  and  as  the  time  of  a  new 
president  for  three  months  after  his  inauguration  is  mainly  oc- 
cupied with  the  reception  of  office-seekers  and  their  friends,  we 
may  not  be  surprised  that  the  adjourned  conference  and  its 
future  prospects  vanished  from  the  minds  of  the  people,  and 
occasioned  no  perceptible  ripple  in  administrative  affairs.  The 


412  THE  PRESENT  AND  THE  FUTURE 

report  of  the  American  delegates  was  submitted  to  Congress 
in  the  latter  part  of  February,  1893.  In  it  they  said:  "  It  is 
anticipated  that  the  delegates  upon  the  reassembling  of  the 
conference  will  be  able  to  state  definitely  the  views  of  their 
respective  governments  as  to  what  plans  are  practicable  to 
>  secure  the  greater  use  of  silver  as  a  part  of  the  metallic  money 
of  the  world.  The  delegates  of  the  United  States  express  the 
hope  that  the  conference  at  the  next  session  will  be  able  to 
adopt  some  practical  method  to  secure  this  end.  They  are  en- 
couraged in  this  hope  by  the  fact  that  in  the  later  sessions  of 
the  conference  the  general  concensus  of  opinion  was  distinctly 
more  favorable  to  the  objects  which  the  conference  had  in  view 
than  in  the  early  sessions."  The  radical  silver  element  in  Con- 
gress was  rather  pleased  than  otherwise  over  the  failure,  having 
no  faith  in  international  conferences,  and  little  use  for  any- 
thing short  of  free  coinage;  they  were  too  impatient  to  have 
the  United  States  undertake  it  alone  to  bother  with  other  na- 
tions. In  the  correspondence  on  the  subject  it  appeared  that 
the  other  nations  expected  the  United  States  to  present  a  defi- 
nite proposition  when  the  conference  reassembled ;  but  the  new 
administration  was  at  first  too  engrossed  in  reversing  the  policy 
of  its  predecessor  in  the  Hawaiian  Islands  to  consider  the  con- 
ference, and  the  President  asked  for  a  postponement  till  No- 
vember 30.  So  the  date  passed  with  hardly  a  mention  on  this 
side  of  the  water.  The  popular  mind  was  absorbed  in  the  mis- 
sion of  Mr.  Blount  to  Honolulu,  and  the  first  manifestations  of 
an  uneasiness  in  the  business  world. 

The  subject  attracted  more  attention  iji  England.  Soon 
after  the  adjournment  of  the  conference  the  Indian  Currency 
Commission  resumed  its  hearings  and  continued  them  till  the 
latter  part  of  February.  The  testimony  taken  is  interesting 
reading  in  the  light  of  subsequent  events,  and  furnished  little 
to  warrant  the  conclusion  that  a  "  rupee  vacuum  "  could  be 
created  in  India,  and  the  rate  of  exchange  thereby  stiffened, 


REPORT  OF  THE  INDIAN  CURRENCY  COMMISSION  413 

as  the  Indian  Currency  Association  proposed.  The  idea  rested 
largely  on  the  economic  theorem  that  money  is  made  dearer 
by  decreasing  its  supply  —  a  theorem  which  sometimes  fails 
when  the  very  process  reduces  the  commercial  value  of  the 
metal  of  which  the  money  is  made.  The  majority  of  the  wit- 
nesses, who,  from  their  experience  in  Indian  affairs,  were  the 
most  competent  to  judge,  gave  various  reasons  why  in  their 
opinion  a  gold  standard  would  be  a  failure  and  even  a  disaster 
in  India.  They  feared  the  effects  on  the  Indian  population  if 
the  plan  of  the  Currency  Association  did  what  was  promised 
for  it,  and  they  had  little  faith  in  such  artificial  means  as  a 
remedy  for  the  government's  predicament. 

The  members  of  the  commission  were  evidently  far  from 
hopeful  or  sanguine  as  to  the  plan.  From  the  first  of  March 
to  the  first  of  June  they  waited  before  formulating  a  report. 
Meanwhile  the  bimetallic  agitation  went  on  in  Lancashire  and 
other  parts  of  Great  Britain,  while  the  Indian  officials  and  the 
Currency  Association  sent  on  appeals  for  action,  if  bimetal- 
lism were  impossible,  or  there  were  no  hopes  of  the  reassem- 
bling of  the  conference.  On  the  other  hand,  prominent  asso- 
ciations engaged  in  the  Oriental  trade  continued  to  file  protests 
against  the  adoption  of  a  gold  standard  for  India. 

The  report  of  the  commission  is  dated  May  31,  the  day 
after  that  fixed  for  the  reconvening  of  the  conference.  It  may 
have  been  simply  a  coincidence,  but  there  appears  to  be  abun- 
dant circumstantial  evidence  that  the  commission  would  have 
preferred  to  have  left  matters  as  they  were,  had  there  been 
any  remaining  prospect  of  an  international  agreement  on  such 
terms  as  England  had  expressed  a  willingness  to  consider. 
England  would  probably  have  yielded  something  more,  rather 
than  try  an  experiment  which  the  majority  of  the  commission 
evidently  feared. 

In  the  whole  course  of  the  long  controversy,  probably, 
there  has  never  been  provided  better  material  for  a  bimetallic 


414  THE  PRESENT  AND  THE  FUTURE 

argument  than  is  furnished  by  this  report.  Let  us  look  at  it  a 
moment  from  a  bimetallic  standpoint.  The  commission  seemed 
to  fear  that,  if  the  mints  were  entirely  closed  to  silver,  ex- 
change might  rise  above  the  fixed  par  of  Is.  4:d.,  though  the 
commercial  price  of  silver  would  fall ;  that  is,  the  price  of  silver 
would  fall  because  of  the  sudden  stoppage  in  the  commercial 
demand,  while  the  exchangeable  value  of  the  rupee  might  rise 
to  an  uncertain  height  because  the  supply  in  India  was  cut  off. 
Here  were  silver  coins  which  had  possessed,  according  to  the  re- 
port, a  steady  intrinsic  and  exchange  value  among  287,000,000 
people,  a  population  as  great  as  all  Europe,  leaving  out  Russia, 
and  it  was  proposed  to  produce  a  sort  of  corner  in  these  coins 
in  India,  which,  while  lowering  their  intrinsic  value,  might,  it 
was  feared,  so  raise  the  exchange  value  as  to  lead  to  a  fall  in 
the  price  of  Indian  produce.  In  the  hope  of  avoiding  this  pos- 
sibility, the  commission  proposed  that,  while  the  mints  were 
closed  to  the  public,  the  government  should  have  the  right  of 
coining  rupees  on  its  own  account,  if  at  any  time  exchange 
seemed  in  danger  of  rising  too  high;  that  is,  if  the  demand 
of  the  people  for  rupees  became  so  severe  as  to  threaten  a  fall 
in  the  price  of  their  products. 

After  years  of  free  mintage  the  whole  per  capita  circula- 
tion in  India  at  that  time,  as  given  in  official  reports,  was  5.35 
rupees  ($1.26).  This  was  the  circulation  which,  to  raise  ex- 
change, it  was  proposed  to  monopolize.  IS^ow  observe  the  situ- 
ation of  the  Indian  government.  In  the  report  it  is  stated : 

"  The  government  have  yearly  to  remit  a  very  large  sum  to  this 
country  [England]  in  discharge  of  their  gold  obligations.  In  1873--74, 
before  the  fall  [of  silver]  commenced,  the  amount  remitted  was  £13,- 
285,678,  which,  at  a  rate  of  exchange  of  Is.  10.351<1,  was  represented 
by  Rx.  14,265,700  [tens  of  rupees].  During  the  last  year  (1892--93), 
the  amount  remitted  was  £16,532,215.  which,  at  the  rate  of  exchange 
of  that  year,  viz.:  Is.  2.985d.,  required  a  payment  of  Rx.  26.478,415. 
If  this  could  have  been  remitted  at  the  exchange  of  1873--74,  it  would 
have  needed  only  Rx.  17,751,920." 

After  making  all  allowances,  "  it  is  certain,"  say  the  com- 
missioners, "  that  the  government  had  actually  to  remit  in 


THE  REPORT  FROM  A  BIMETALLIC  STANDPOINT  415 

1892-3  upwards  of  Rx.  8,700,000  more  than  if  the  exchange 
had  been  at  its  former  point."  Proceeding  now  from  a  bimetal- 
lic standpoint,  it  will  be  observed  that,  as  the  government  ac- 
quired its  rupees  principally  by  the  taxation  of  the  people  with 
whom  the  rupee  had  not  materially  changed  in  value,  this  in- 
creased remittance  meant  an  additional  tax  of  over  50  per  cent, 
to  pay  the  English  creditor,  not  for  more  money  invested,  but 
for  the  change  that  had  come  over  the  creditor's  money  —  for 
the  difference  which  had  come  between  the  money  the  In- 
dian debtor  acquired  and  the  money  the  English  creditor  re- 
quired. While  the  silver  of  the  Indian  was  worth  no  more  in 
commodities  in  India  than  in  1873,  the  gold  of  the  creditor 
would  buy  much  more  in  England  —  his  prices  had  fallen. 
He  had  not  only  received  regularly  the  annual  interest  on  the 
securities,  but  the  principal  had  greatly  enhanced  in  value 
without  his  investing  an  additional  penny.  But  this  royal 
commission  of  the  creditor  nation,  in  speaking  of  the  possible 
rise  of  the  exchange  value  of  the  rupee,  in  case  the  govern- 
ment had  not  the  power  of  regulating  the  intensity  of  the  pro- 
posed vacuum  in  the  legal  tender  of  the  debtors,  says:  "  The 
rise  in  exchange  would  be  calculated  to  lead  to  a  fall  in  the 
price  of  Indian  produce.  And,  if  this  were  seen  to  follow, 
and  believed  to  be  caused  by  the  action  of  the  government, 
public  opinion  might  be  disturbed,  and  the  situation  might 
become  critical.  The  view  has  been  expressed  that,  even 
though  the  native  producers  might  not  be  likely  to  be  actively 
hostile  to  a  scheme  which  left  prices  unaffected,  they  would 
be  far  from  indifferent,  and  the  state  of  things  might  become 
dangerous  if  prices  began  to  fall  sensibly." 

Was  this  a  compliment,  unconsciously  rendered,  to  the 
sensitiveness  and  natural  resentment  of  injustice  of  the  taxed 
native  of  India,  sentiments  which  about  a  hundred  years  be- 
fore were  strongly  manifested  in  the  American  colonies? 
Pretty  much  all  Christendom  had  been  experiencing  falling 


416  THE  PRESENT  AND  THE  FUTURE 

prices  for  twenty  years  without  becoming  involved  in  any 
more  serious  trouble  than  a  dispute  as  to  whether  the  signs  of 
industrial  depression  were  really  due  to  the  continuing  adop- 
tion of  the  gold  standard  and  the  demonetization  of  silver,  and 
whether,  after  all,  it  was  not  a  good  thing  —  a  financial  evolu- 
tion, an  economic  advancement,  a  progress  in  civilization. 
But  England,  which  clung  to  the  gold  standard,  notwithstand- 
ing all  international  efforts  and  the  appeals  of  India,  feared  to 
force  a  similar  experience,  even  to  a  slight  degree,  on  the  sub- 
jugated Indian  native.  Had  a  prosperous  creditor  government 
been  able  to  force  upon  its  own  intelligent  masses  a  disaster 
which  the  Indian  ryot  and  trader  would  not  endure?  So  the 
bimetallist  might  regard  it. 

Gold  was  yet  too  precious  at  the  Bank  of  England  to  per- 
mit the  government  to  regard  with  complacency  or  favor  any 
scheme  likely  to  withdraw  from  the  market  the  Indian  pro- 
duction of  gold  or  to  withdraw  from  the  existing  stores  a  supply 
for  placing  India  on  the  English  standard.  Here  was  one  of 
the  difficulties  which  made  England  extremely  anxious  for 
some  arrangement  for  checking  the  fall  of  silver,  for  India 
must  be  satisfied  and  English  exporters  appeased.  But  it  was 
becoming  apparent  that  the  United  States  intended  to  discon- 
tinue silver  purchases.  The  commission  must  do  something, 
and  so  they  proposed  their  compromise  of  closing  the  mints  to 
silver  except  on  government  account,  and  announcing  that 
gold  would  be  received  at  the  public  treasuries  for  public  dues 
at  the  rate  of  Is.  4d.  per  rupee. 

The  report  with  this  modified  plan  was  signed  by  all  the 
commissioners,  and  one  of  them,  Leonard  Courtney,  before 
regarded  as  a  leading  advocate  of  the  gold  standard,  announced 
that  he  had  become  a  bimetallist.  In  a  note  appended  to  the 
report,  after  expressing  his  belief  that  the  question  of  India's 
troubles  should  first  be  considered  in  the  light  of  the  inquiry 
as  to  whether  gold  had  become  more  valuable  in  itself  or  silver 


INDIAN  VICEROY  ACCEPTS  THE  PLAN  417 

less  valuable  in  itself,  an  inquiry  avoided  by  the  commission, 
he  says: 

"  For  reasons  upon  which  I  do  not  now  enter,  I  have  come  to  the 
conclusion  that  the  divergence  between  gold  and  silver  has  been, 
to  a  large  extent,  due  to  an  appreciation  of  gold,  and  this  opinion 
necessarily  affects  niy  judgment  of  the  policy  of  the  Indian  govern- 
ment, which  is  to  adopt  a  gold  standard  instead  of  one  of  silver. 
This  is  to  accept  as  unalterable,  if  not  to  intensify,  the  aggravated 
burden  thrown  on  India.  It  may  be  that  no  other  course  is  possible, 
but  the  home  government  should  ask  itself  whether  it  is  through  its 
own  action  that  no  other  course  is  possible  and  whether  the  Indian 
government  might  not  propose  a  very  different  course  if  there  was 
any  chance  of  its  being  favorably  considered  by  the  supreme  govern- 
ment. I  am  myself  drawn  to  the  conclusion  that  the  home  govern- 
ment is  the  greatest  obstacle,  perhaps  the  only  substantial  obstacle, 
to  the  establishment  of  an  international  agreement  for  the  use  of 
silver  as  money,  which,  without  attempting  to  restore  the  position  of 
twenty  years  since,  would  relieve  India  from  the  anxiety  of  a  further 
depreciation  of  its  revenue  in  relation  to  its  liabilities.  The  problem 
may  be  thus  stated:  The  Indian  government  asks  permission  to 
adopt  a  certain  course,  but,  as  is  well  understood,  not  the  course  it 
would  of  its  own  free  will  first  desire  to  be  adopted.  In  considering 
whether  the  course  actually  proposed  should  be  sanctioned,  we  can- 
not refuse  to  consider  whether  there  are  invincible  obstacles  to  the 
entertainment  of  the  course  which  would  be  the  first  preference  of 
India." 

Although  the  report  of  the  commission  formulating  the 
plan  above  indicated  was  signed  immediately  after  the  date 
for  the  reconvening  of  the  conference,  it  was  still  held  back. 
It  should  be  understood  that  this  was  not  a  plan  devised  under 
the  stress  of  legislative  contention.  The  hearings  were  secret, 
witnesses  called  in  one  by  one,  and  the  public  had  no  definite 
knowledge  of  the  thoughts  and  purposes  of  the  commission  till 
the  report  was  submitted  to  the  government  about  the  middle 
of  June. 

Within  a  few  hours  the  Viceroy  telegraphed  the  accept- 
ance of  the  recommendations  of  the  commission  by  the  Indian 
government,  and  asked  the  Ministers  of  the  Queen  for  author- 
ity to  act  without  delay.  Five  days  later  the  Secretary  of  State 
for  India  telegraphed  that  authorization.  The  council  of  India 
was  immediately  summoned  to  meet  at  Simla  on  the  26th.  A 
bill  was  laid  before  it  amending  the  currency  acts  to  carry  out 
27 


418  THE  PRESENT  AND  THE  FUTURE 

the  plan,  and  was  at  once  passed.  -  The  mints  were  immediately 
closed,  and  the  same  day  the  fact  was  communicated  to  the 
English  government.  Gladstone  announced  it  in  the  Com- 
mons in  these  words: 

"  It  may  be  for  the  convenience  of  the  House  to  learn  the 
exact  terms  of  the  telegram  received  from  the  Viceroy  of 
India  to-day,  communicating  the  steps  taken  with  respect  to 
the  report  of  Lord  Herschell's  committee  on  the  Indian  cur- 
rency. The  telegram  is  this:  'Council  has  passed  an  act, 
which  takes  effect  at  once,  to  carry  out  the  plan  recommended 
by  Lord  Herschell's  committee.  Act  provides  for  close 
of  Indian  mints  to  free  coinage  of  silver  from  and  after 
date  of  passing.  Arrangements  will  be  made  to  issue  rupees 
from  the  mint  in  exchange  for  gold  and  sovereigns  at  the  rate 
of  16d.  per  rupee  (until  further  notice)  and  receive  sovereigns 
and  half-sovereigns  at  public  treasuries  in  payment  of  govern- 
ment dues  at  the  same  rate.  It  is  intended  to  introduce  a  gold 
standard  into  India,  but  gold  will  not  be  made  legal  tender  at 
present.' ' 

The  Indian  government  made  a  determined  effort  to  main- 
tain the  par  of  exchange  fixed  in  the  arrangement  for  the  clos- 
ing of  the  mints,  but  the  price  of  silver  immediately  dropped 
from  37  pence  to  30^,  and  the  natural  par  of  exchange  to 
about  13  pence.  The  result  can  be  imagined.  The  absurdity 
of  fearing  a  dangerous  rise  in  exchange  was  apparent.  Silver 
kept  pouring  in,  and  unless  the  government  sold  council  bills 
at  less  than  the  par  of  exchange  it  had  undertaken  to  maintain 
they  could  not  be  sold  at  all.  In  July  the  price  of  silver  rose 
to  32^-  pence  on  speculative  buying  in  this  country,  but  from 
that  point  it  began  a  decline  which  has  seldom  been  interrupted 
since.  The  situation  of  the  Indian  government  for  the  first 
three  months  of  this  experiment  is  thus  described  in  Brad- 

strccfs  for  September  23: 

"  The  non-success  of  the  closing  of  the  mints  is  thus  far  absolute. 
The  total  budget  requirements  of  the  Indian  government  for  pay- 


BALFOUR'S  DEFENCE  OF  BIMETALLISM  419 

nil-ins  to  be  made  In  gold  in  Europe  during  the  current  fiscal  year 
are  about  £18,700,000,  against  £17,000,000  in  1892.  Since  March  1, 
1893,  the  total  amount  secured  by  the  issue  of  council  drafts  on 
India  has  been  only  £5,850,000  against  £7,105,000  in  the  same  period  a 
year  ago.  Since  June  20,  when  the  mints  were  closed  and  the  at- 
tempt to  create  a  fixed  value  of  Is.  4d.  per  rupee  for  exchange  went 
into  effect,  the  showing  has  been  very  much  more  disastrous.  In 
that  period  council  bills  have  been  disposed  of  only  to  the  amount  of 
£200,000,  against  £2,200,000  in  the  same  period  a  year  ago." 

The  government  very  quickly  abandoned  all  attempt  to 
maintain  the  rate  of  Is.  4d,  but  had  no  better  success  in  an 
effort  to  maintain  the  rate  of  Is.  3^d.  This  failure  naturally 
threw  discredit  upon  the  project  in  India,  and  especially  in 
England,  where  it  was  more  generally  understood.  Another 
effect  was  to  strengthen  the  Bimetallic  League,  and  to  awaken 
it  to  fresh  endeavors.  Distinguished  recruits  openly  flocked 
to  it.  The  apostacy  of  practical  men  and  students  like  Gibbs, 
Goschen,  and  Courtney  resulted  in  serious  thinking,  but  some- 
thing like  a  sensation  was  caused  when  a  man  in  Balfour's 
political  position  delivered  his  famous  Mansion  House  address 
on  August  3,  or  about  five  weeks  after  the  mints  were  closed. 
He  had  strongly  leaned  to  the  bimetallic  cause  before,  but  in 
this  address  he  came  forward  wdth  the  strongest  open  defence 
of  it  as  a  practical  policy  which  had  been  made  in  England. 
He  vigorously  denounced  the  attempt  to  force  an  inconvertible 
currency  on  the  Indian  masses,  declared  that  the  gold  of  Eng- 
land was  open  to  an  onslaught  from  any  of  the  large  govern- 
ments of  the  Continent  if  the  "  kissing-at-sight  "  terms  should 
for  any  reason  cease,  and  added: 

"  We  have  hitherto  been  accustomed  to  boast  of  our  isolation 
in  matters  of  currency,  and  we  now  find  ourselves  trembling  with 
apprehension  at  the  course  that  may  be  pursued  by  this  or  that 
government  over  whom  we  have  no  control.  Hitherto,  we  have 
boasted  of  our  independence,  and  we  find,  to  our  dismay,  that  it  may. 
perhaps,  rest  with  the  uncommercial  policy  of  some  military  power 
on  the  Continent  to  upset  the  whole  system  of  our  finance  in  this 
counti'y.  We  have  claimed,  and  we  have  surely  rightly  claimed, 
that  we  were  the  great  commercial  community  of  the  world,  trading 
with  all  other  countries,  covering  the  seas  with  our  fleets,  taking 
toll  of  all  nations,  having  commercial  intercoiirse  with  all  nations, 
and  we  now  find,  I  fear  partly  through  our  own  fault,  that  the  world 


420  THE  PRESENT  AND  THE  FUTURE 

is  divided  into  gold-using  countries  and  into  silver-using  countries, 
that  the  whole  mechanism  of  exchange  between  the  gold  and  silver 
using  countries  is  upset,  and  that  with  that  mechanism  of  exchange 
every  merchant  who  deals  with  South  America,  or  with  India,  or 
with  Mexico,  or  with  China  is  hampered  and  embarrassed  in  all 
his  transactions." 

The  speculative  movement  which  for  a  time  sustained  the 
price  of  silver,  referred  to  above,  was  to  some  extent  due  to 
a  rumor,  apparently  well  founded,  that  the  Indian  government 
was  to  put  a  heavy  import  duty  on  silver.  The  government 
doubtless  did  give  this  matter  early  consideration  as  a  means  of 
preventing  continuing  imports  of  silver  and  of  keeping  up 
the  price  of  council  bills  ;  but  when  the  fact  leaked  out 
of  official  channels,  silver  began  to  be  purchased  and  sent  to 
India  in  anticipation  of  a  higher  price  after  the  tax  had  been 
laid.  This  movement  made  the  sale  of  council  bills  still  more 
difficult. 

Meanwhile  the  India  Loan  Bill  (£10,000,000)  had  passed 
the  Commons,  and  in  the  latter  part  of  December  came  up  in 
the  House  of  Lords,  where  Lord  Kimberly  explained  the  rea- 
son for  it  and  said:  "  If  it  should  so  happen  that  this  policy 
of  closing  the  mints  should  entirely  fail,  we  shall  be  thrown 
back  into  our  original  situation,  which  is  a  very  grave  one,  be- 
cause at  the  present  price  of  silver  the  exchange,  if  measured 
as  it  is  usually  measured,  stands  at  no  more  than  one  shilling 
and  one-eighth;  and,  speaking  in  round  numbers,  at  that  rate 
of  exchange  the  government  of  India  would  be  landed  in  a 
deficit  of  no  less  than  6,000,000  rupees.  That  would  be  a 
deficit  of  a  most  serious  and  alarming  character."  In  speak- 
ing of  the  vast  amount  of  silver  which  continued  to  find  its 
way  into  India,  he  gave  as  another  cause  besides  the  speculative 
one  the  fact  that  the  Indian  native  seemed  to  always  demand 
silver  for  purposes  other  than  currency,  and  quoted  Sir  David 
Barbour,  who  had  just  returned  to  England,  as  saying  that  this 
normal  demand  had  been  stimulated  in  the  ordinary  way  in 
which  a  demand  is  stimulated  by  a  large  fall  in  the  price. 


DIFFICULTIES  OF  THE  INDIAN  GOVERNMENT  421 

"  The  natives,"  he  said,  "  generally  consider  that  this  is  a 
most  favorable  opportunity  to  purchase  silver  for  the  purpose 
of  ornaments;  and  Sir  David  Barbour  thinks  that  that  probably 
accounts  for  the  larger  part  of  the  demand.  When  we  remem- 
ber that  the  population  of  India  numbers  287,000,000,  we  see 
that  any  increased  demand  from  so  vast  a  population  may 
easily  produce  a  very  considerable  result."  He  might  with 
reason  probably  have  added  that,  in  contrast  with  the  difficul- 
ties of  the  government  in  paying  the  gold  debt  to  England 
and  with  the  depression  of  the  Lancashire  trade  with  the 
Orient,  the  mass  of  Indian  natives  had  been  enjoying  fair  har- 
vests and  unusual  prosperity,  so  that  they  sought  silver  for 
their  hoardings,  and,  if  silver  could  not  have  been  sent  to  India 
in  large  quantities  at  the  time  when  the  government  was  en- 
deavoring to  produce  a  "  rupee  vacuum,"  there  might  have 
been  trouble.  The  hoarding  propensity  is  one  of  the  important 
features  of  the  Indian  problem. 

In  the  course  of  the  same  debate  the  Marquis  of  Salisbury 
deplored  the  measures  that  had  been  taken  and  predicted  that 
they  would  fail.  He  believed  that  the  "  private  mints  "  of 
India  were  unusually  active.  Soon  after  this,  or  early  in  Janu- 
ary, 1894,  came  the  announcement  that  the  import  tax  would 
not  be  laid  on  silver,  and,  of  course,  the  silver  which  had  been 
held  in  anticipation  of  the  tax,  and  which  was  on  its  way  there, 
was  dumped  on  the  market  with  natural  results.  The  price 
fell  to  27(7.  in  London.  In  the  first  part  of  February  the 
Indian  government  further  announced  that  it  had  come  to  the 
conclusion  to  abandon  the  attempt  to  keep  council  drafts  any 
longer  at  Is.  3^(7.,  or  at  any  other  fixed  price.  This  apparently 
meant  that,  as  the  fiscal  year  was  drawing  to  a  close,  and  the 
sale  of  council  bills  fell  far  short  of  paying  the  gold  debt 
to  England,  it  would  use  the  remaining  days  to  sell  bills  at 
any  price,  and  make  up  the  deficiency  out  of  the  proceeds 
of  a  loan. 


422  THE  PRESENT  AND  THE  FUTURE 

This  might  have  been  as  favorable  an  opportunity  for  the 
reconvening  of  the  conference  or  the  inauguration  of  a  new 
one  as  any  that  had  occurred,  but  the  government  of  the 
United  States  had  business  of  an  apparently  more  serious 
nature  on  hand.  The  course  of  affairs  in  India  and  England 
have  been  followed  without  interruption  by  reference  to  con- 
temporary monetary  events  in  other  countries,  and  it  will  be 
necessary  now  to  return  for  a  moment's  examination  of  the 
condition  of  affairs  in  this  country  at  the  time  the  India  mints 
were  closed. 

In  a  previous  chapter  the  reader's  attention  was  called  to 
the  beginning  of  an  'export  movement  of  gold  to  Europe  in 
1889,  and  to  the  continuation  of  the  movement  through  the 
two  following  years,  although  much  of  the  gold  was  exported 
when  the  rate  of  exchange  did  not  warrant  it  under  ordinary 
conditions  of  trade.  It  is  easy,  and  too  often  the  practice  in 
the  study  of  finance,  and  more  especially  in  "  practical  poli- 
tics "  when  dealing  with  financial  questions,  to  attribute  any 
important  or  striking  phenomenon  to  some  one  specific  cause. 
ISTo  events  are  so  simple.  The  camel  may  successfully  bear  a 
very  heavy  burden,  but  the  ultimate  straw  has  serious  effects. 
The  public  is  apt  to  regard  one  of  the  last  straws  as  wholly 
responsible  for  the  calamity,  and  there  are  always  those  who 
are  interested  in  making  it  so,  whereas  the  camel  would  not 
have  felt  it,  might  have  travelled  on  comfortably  and  happily, 
but  for  the  remainder  of  the  burden. 

The  first  great  fact  in  connection  with  the  export  move- 
ment of  gold  was  the  persistent  and  strong  European  demand 
for  it,  and  the  determined  policy  of  certain  governments,  by 
the  imposition  of  certain  trade  and  banking  regulations,  to  at- 
tract it  their  way,  or,  at  least,  to  prevent  its  going  to  America. 
This  has  been  already  explained,  but  it  may  be  added  that  some 
of  this  gold  went  into  war  chests,  conspicuously  in  Russia, 
where,  for  the  time,  it  was  lost  to  commerce,  and  its  movement, 


CAUSES  OP  THE  EXPORT  OP  GOLD  433 

therefore,  did  nothing  to  relieve  the  ordinary  demands  of  the 
market  for  the  metal. 

A  second  fact  was  that  the  prices  of  the  great  staples,  as 
well  as  of  lesser  commodities,  were  extremely  low,  thereby 
diminishing  the  value  of  our  exports  of  merchandise  in  relation 
to  the  quantity. 

Related  to  the  latter  fact  was  another  —  the  government 
revenues  were  falling  off,  and  were  insufficient  to  meet  the 
ordinary  expenditures. 

The  fourth  fact  was  the  expansion  of  paper  currency 
through  the  purchase  of  silver,  and  the  issue  of  treasury  notes. 

The  fifth  fact  was  a  narrowing-down  of  business  connec- 
tions and  enterprise  because  of  the  uncertainty  and  timidity 
as  to  the  results  of  the  announced  policy  of  the  administration 
to  reduce  the  tariff. 

These  five  facts  entered  into  the  situation  one  after  the 
other  in  the  order  given,  and  there  are  many  good  reasons  for 
supposing  that  it  was  the  last  which  broke  the  camel's  back, 
rather  than  the  silver-purchase  act. 

There  was  gold  enough  in  the  country,  for,  though  the 
net  gold  exports  for  the  four  calendar  years  1889-92  were 
$135,000,000,  the  gold  production  for  the  same  time  was 
$132,000,000,  to  say  nothing  of  the  gold  from  ores  and  base 
bars  produced  in  Mexico  and  British  America.  The  drain, 
therefore,  had  not  reduced  our  stock.  From  the  time  the  gov- 
ernment began  to  inject  silver  into  its  currency,  that  is,  from 
1878  to  1888,  the  net  excess  of  imports  of  gold  over  exports 
was  $224,000,000,  and  the  gold  product  was  $387,000,000,  a 
total  of  $611,000,000;  '  practically  our  whole  gold  stock 
was  obtained  after  we  began  to  coin  silver.  It  is  by  no  means 
argued  from  this  that  the  coinage  of  silver  aided  in  the  acqui- 
sition of  gold,  for  it  doubtless  had  a  contrary  effect  during  a 

1  E.  O.  Leech,  ex-Director  of  the  Mint,  Bankers'  Ifagazinc,  Nov., 
1895. 


424  THE  PRESENT  AND  THE  FUTURE 

greater  part  of  the  period.  It  simply  shows  that  silver  coinage 
did  not  seriously  prevent  our  acquisition  of  gold,  that  silver  was 
regularly  absorbed  by  a  prosperous  and  increasing  business, 
and  that  at  the  beginning  of  1893  our  gold  stock  was  about  as 
large  as  it  had  ever  been. 

Not  until  the  last  months  of  1892  were  there  any  indica- 
tions that  either  the  silver  currency  or  that  issued  on  bullion 
was  occasioning  any  trouble  or  uneasiness.  So  long  as  work- 
ers Avere  busy,  mills  running,  and  enterprises  starting  up  and 
reaching  out,  the  character  of  the  currency  attracted  no  at- 
tention. But  the  moment  business  halted  in  an  attitude  of 
uncertainty  and  began  to  contract  its  lines,  whether  from  fear 
or  simply  as  a  good  business  act,  to  await  lower  duties  on  cer- 
tain articles,  the  burden  of  too  much  silver  in  the  currency  be- 
came manifest.  The  effect  would  have  been  the  same  if  an 
equal  amount  of  outstanding  currency  had  been  based  directly 
on  gold,  on  which,  as  a  matter  of  fact,  all  our  currency  finally 
rests.  The  currency  was  not  needed,  and,  as  the  Europeans 
were  struggling  as  hard  as  ever  for  gold,  our  surplus  money 
became  a  convenient  article  with  which  to  withdraw  gold  from 
the  Treasury. 

This  process,  however,  could  have  continued  but  a  short 
time  but  for  the  influence  of  the  third  fact  mentioned  above 
—  insufficient  revenue.  If  the  paper  which  was  used  to  with- 
draw gold  could  then  have  been  held  in  the  Treasury,  the  cur- 
rency would  very  quickly  have  become  contracted  to  the  point 
required  for  the  diminished  business.  But,  with  daily  deficits, 
the  Treasury  could  keep  neither  its  gold  nor  the  currency 
which  withdrew  it.  The  gold  went  abroad  and  the  currency  re- 
turned to  the  over-supplied  channels  to  again  become  available 
for  the  same  process.  It  was  a  vicious  circle.  The  halt  in  busi- 
ness to  await  tariff  revision  made  currency  redundant  and  di- 
minished the  revenues  of  the  government;  a  redundant  cur- 
rency and  a  lean  Treasury  forced  out  the  gold,  and  the  de- 


THE  PANIC  OF  1893  425 

parture  of  gold  increased  the  hesitation  of  business.  At  the 
same  time  the  European  demand  for  gold,  much  of  which  was 
purchased  by  the  Rothschild  group  for  Austria,  and  the  low 
price  of  exportable  merchandise  were  operating  in  the  same 
direction. 

The  whole  responsibility  for  this  situation  was  thrown  upon 
the  silver-purchase  act  by  the  financial  and  banking  people, 
with  whom  it  was  naturally  unpopular  for  two  reasons  —  the 
selfish  one,  because  the  treasury  notes  operated  against  a  prof- 
itable increase  of  national  bank  notes,  and  the  unselfish  one, 
because  the  continuance  of  the  act  was  contrary  to  sound  fed- 
eral finance.  Obviously,  however,  the  repeal  of  the  act  could 
be  no  cure  for  the  situation  then  existing.  The  redundant  cur- 
rency was  already  there.  Its  repeal  was  a  wise  act  for  the 
future;  it  might  prevent  a  similar  situation  when  adverse  con- 
ditions again  conspired  together.  But,  bad  as  the  act  was  at 
the  time  from  every  point  of  view,  and  especially  from  a  bi- 
metallic standpoint,  as  it  was  a  continuing  obstacle  to  an  in- 
ternational agreement,  its  repeal  could  then  help  neither  the 
Treasury  situation  nor  business,  and  it  did  not. 

President  Cleveland  took  the  view  of  those  who  thought, 
or  professed  to  think,  it  the  whole  evil.  By  the  time  the  Indian 
Currency  Commission  made  their  report  the  free  gold  in  the 
United  States  Treasury  had  decreased  to  $89,000,000,  and 
while  the  Indian  government  was  hurrying  to  close  its  mints 
in  anticipation  of  the  repeal  of  the  silver-purchase  act  here,  the 
panic  came  on.  Four  days  after  the  Indian  mints  were  closed 
the  President  summoned  Congress  to  meet,  August  7,  to  re- 
peal the  silver-purchase  act,  to  which  he  wholly  ascribed  "  the 
present  perilous  condition." 

The  redundant  currency  at  once  disappeared;  people  drew 
their  money  out  of  the  banks  and  put  it  under  their  pillows, 
and  by  the  time  Congress  met  to  cure  the  situation  by  cutting 
off  the  source  of  supply,  those  who  were  still  trying  to  do  busi- 


426  THE  PRESENT  AND  THE  FUTURE 

ness  were  paying  a  premium  for  the  very  notes  the  issue  of 
which  it  was  proposed  to  discontinue.  All  the  available  cur- 
rency was  drawn  from  the  Treasury  —  unfortunately,  the 
amount  was  small  because  of  the  deficits  in  revenue — and  gold 
returned  so  freely  that  the  reserve  was  at  a  higher  figure  than 
for  six  months.  Gold  again  circulated.  Laboring  men  were 
paid  with  it  so  far  as  possible.  It  was  the  cheapest  money  to  be 
had.  Exchange  turned  and  gold  was  largely  imported  during 
the  summer.  Indeed,  we  had  the  interesting  spectacle  of 
England  sending  us  gold  and  taking  our  silver  to  send  to  India, 
where  it  was  endeavoring  to  produce  a  scarcity  of  rupees. 

The  President  in  his  message  to  Congress  on  assembling 
strongly  argued  that  the  Treasury  reserve  had  been  depleted 
by  the  increasing  redemption  of  treasury  notes  in  gold,  such 
redemption  being  necessary  to  maintain  the  parity ;  but  it  will 
probably  appear  to  most  persons  who  reflect  upon  it  now  that 
there  is  no  rational  basis  for  a  gold  reserve  in  a  country  main- 
taining a  gold  standard  unless  it  stands  for  the  redemption  of 
an  outstanding  currency  of  less  intrinsic  value  than  gold.  In 
the  permanent  preservation  of  a  parity  between  money  of  the 
standard  value  and  money  of  a  less  value,  there  can  be  no 
fixed  discrimination  against  different  forms  of  the  currency 
of  the  lower  order.  If  every  treasury  note  and  greenback 
were  cancelled  and  the  currency  of  silver  certificates  became 
too  abundant,  and  if  a  situation  such  as  that  of  1893  ap- 
peared, the  maintenance  of  the  parity  would  quite  as  much  re- 
quire the  redemption  of  those  certificates  in  gold,  if  gold  were 
wanted  and  the  certificates  were  not.  In  the  last  analysis,  all 
our  currency  hangs  on  the  same  peg  —  the  ability  of  the  gov- 
ernment to  pay  in  gold.  In  this  respect  the  situation  of  the 
Bank  of  England  is  precisely  similar;  if  there  is  a  crisis,  and 
people  rush  in  to  redeem  their  notes,  the  bank  must  secure 
more  gold,  as  it  did  from  the  Bank  of  France  in  1890.  In 
most  other  respects,  of  course,  the  Bank  of  England  and  the 


REPEAL  OP  THE  ACT  OF  1890  427 

United  States  Treasury  are  very  dissimilar  institutions.  The 
former  can  generally  regulate  the  proportion  of  its  reserves  to 
its  obligations  by  its  discount  rate;  the  latter  must  depend  for 
its  immunity  upon  a  surplus  balance  large  enough  to  enable  it 
to  withdraw  for  the  time  whatever  currency  is  presented  for 
redemption  when  money  is  plenty,  and  enable  it  to  pay  out 
the  currency  for  gold  when  money  is  stringent.  Regulated  by 
such  a  balance,  there  never  could  be  any  question  of  the  ability 
of  government  to  redeem  its  notes  and  certificates,  for  a  busy 
and  industrious  people  can,  under  no  circumstances,  afford  to 
redeem  its  currency  except  within  certain  narrow  limits. 

Looked  at,  however,  from  the  standpoint  of  the  desira- 
bility of  an  international  agreement,  the  repeal  of  the  silver- 
purchase  act  was  demanded,  just  as  from  the  same  standpoint 
its  enactment  was  unwise.  But  the  free-silver  men  who  had 
denounced  it  as  a  half-way  measure  rallied  to  its  defence,  after 
making  sure  that  they  could  not  pass  a  free-coinage  amendment 
to  the  repeal  resolution.  Such  an  amendment  was  lost  in  the 
House  by  a  vote  of  125  to  226,  though  the  vote  on  the  Demo- 
cratic side  was  101  to  112.  The  dreary  struggle  lasted  till 
November  1,  when  the  repeal  resolution  was  passed  with  an 
amendment  introduced  by  the  Democratic  leader  for  repeal  in 
the  Senate,  declaring  it  to  be  the  policy  of  the  United  States 
to  continue  the  use  of  both  gold  and  silver  as  standard  money, 
and  to  coin  both  into  money  of  equal  intrinsic  and  exchange- 
able value,  "  such  equality  to  be  secured  through  international 
agreement,  or  by  such  safeguards  of  legislation  as  will  insure 
the  maintenance  of  the  parity  in  value  of  the  coins  of  the 
two  metals,  and  the  equal  power  of  every  dollar  at  all  times  in 
the  markets  and  in  the  payment  of  debts."  So  far  as  this  addi- 
tion could  have  any  effect  at  all,  it  simply  added  new  life  to 
Europe's  attitude  of  expectancy,  and  soothed  in  a  measure  the 
silver  section  of  the  Democratic  constituency. 

By  the  time  the  law  was  repealed  the  panic  was  over,  and 


428  THE  PRESENT  AND  THE  FUTURE 

money  had  reappeared  from  its  hiding-places,  but  business  was 
flat;  the  money  was  not  needed,  and  gold  again  began  to  leave 
us.  The  repeal  of  the  law  had  not  touched  the  vicious  circle. 
Every  day  showed  an  increase  deficit  in  the  Treasury,  and  the 
currency  which  was  presented  for  redemption  had  to  be  imme- 
diately reissued  to  pay  the  ordinary  expenditures. 

This  sword  of  Damocles  was  still  hanging  over  business. 
The  uncertainty  as  to  what  a  somewhat  unmanageable  ma- 
jority in  Congress  would  do  with  the  customs  duties  abided 
still.  So  long  as  business  halted  the  currency  would  continue 
redundant,  and  the  vicious  circle  would  be  in  full  operation. 
In  his  first  annual  message  to  Congress,  a  month  after  the 
repeal,  the  President  intimated  that  in  time  a  comprehensive 
plan  for  currency  reform  would  be  presented,  and  added : 

"  The  monetary  conference  which  assembled  at  Brussels  upon 
our  invitation  was  adjourned  to  the  30th  of  November,  in  the  present 
year.  The  considerations  just  stated  and  the  fact  that  a  definite 
proposition  from  us  seemed  to  be  expected  upon  the  reassembling 
of  the  conference  led  me  to  express  a  willingness  to  have  the  meet- 
ing still  further  postponed.  It  seems  to  me  that  it  wrould  be  wise 
to  give  general  authority  to  the  President  to  invite  other  nations  to 
such  a  conference  at  any  time  when  there  should  be  a  fair  prospect 
of  accomplishing  an  international  agreement  on  the  subject  of 
coinage.  I  desire  also  to  earnestly  suggest  the  wisdom  of  amend- 
ing the  existing  statutes  in  regard  to  the  issuance  of  government 
bonds." 

He  closed  his  message  with  an  appeal  for  a  reduction  of 
the  customs  duties  and  an  enlargement  of  the  free  list,  when, 
even  then,  deficient  revenues  constituted  a  leading  element  in 
the  vicious  circle.  Two  months  later  the  first  issue  of  bonds 
to  replenish  the  gold  in  the  Treasury  was  announced.  They 
sold  for  $58,660,917,  and  $24,396,459  of  the  gold  to  purchase 
them  came  from  the  Treasury.  Is  it  not  exactly  correct  to  say 
that  the  government  thus  took  $24,000,000  out  of  its  pocket, 
guaranteed  to  pay  5  per  cent,  on  the  amount  for  ten  years,  and 
then  put  it  back.  The  fact  at  the  bottom  was  that  the  govern- 
ment needed  the  money  to  pay  its  expenses.  At  the  same  time 
the  administration  leaders  in  Congress  brought  in  a  measure 


THE  POLICY  OP  THE  ADMINISTRATION  429 

calculated  to  reduce  the  revenues  $60,000,000  a  year,  on  the 
basis  of  our  previous  importations;  and  the  very  same  Con- 
gress, which  had  been  besought  to  repeal  a  law  adding  less 
than  $50,000,000  a  year  to  the  currency,  passed  an  act  for  the 
coinage  of  the  seigniorage  on  the  bullion  in  the  Treasury  — 
enough  to  make  over  55,000,000  standard  dollars.  Though 
vetoed,  it  afforded  another  contribution  to  the  vitality  of 
Europe's  attitude  of  expectancy. 

The  developments  of  the  line  of  policy  the  administration 
had  adopted  may  be  dismissed  with  a  few  words.  Having 
started  out  on  the  theory  that  the  treasury  notes  issued  under 
the  repealed  silver-purchase  act  had  caused  the  trouble,  the 
logical  conclusion  was  that  any  notes  directly  redeemable  in 
gold  should  be  withdrawn  and  destroyed;  for  the  trouble  con- 
tinued. Fifteen  months  after  the  repeal  of  the  obnoxious  act 
the  President  said  in  a  message,  in  recommending  a  law  for 
an  issue  of  bonds  to  retire  the  greenbacks  and  treasury  notes : 

"The  real  condition  which  confronts  us  consists  of  a  lack  of 
confidence,  widespread  and  constantly  increasing,  in  the  continuing 
ability  or  disposition  of  the  government  to  pay  its  obligations  in 
gold.  This  lack  of  confidence  grows  to  some  extent  out  of  the 
palpable  and  apparent  embarrassment  attending  the  efforts  of  the 
government  under  existing  laws  to  procure  gold  and  to  a  greater 
extent  out  of  the  impossibility  of  either  keeping  it  in  the  Treasury 
or  cancelling  obligations  by  its  expenditure  after  it  is  obtained." 

No  doubt  the  feeling  did  extensively  exist  that  the  govern- 
ment might  fail  to  pay  its  obligations  in  gold,  but  it  could  - 
hardly  have  derived  any  added  strength  from  the  fact  that  a 
month  after  this  gloomy  message,  Congress  having  refused  to 
sanction  a  law  for  the  issue  of  bonds  asked  for,  a  large  block 
of  4-per-cent.  coin  bonds  were  sold  to  a  syndicate  for  104.495, 
which  immediately  resold  them  to  a  second  syndicate  for  112.5, 
the  bonds  soon  appearing  on  the  market  at  119. 

Quite  naturally,  also,  a  policy  which  overlooked  the  true  re- 
lation of  the  deficient  revenue  and  saw  no  salvation  for  a 
country  maintaining  a  gold  standard  except  in  the  destruction 


430  THE  PRESENT  AND  THE  FUTURE 

of  all  notes  redeemable  in  gold  led  to  propositions  for  a  bank- 
note currency  such  as  the  so-called  Baltimore  plan  and  that 
of  the  Secretary  of  the  Treasury. 

The  real  effect  of  the  President's  policy  was  to  arouse  in  the 
West  a  spirit  of  enmity  against  the  banks,  and  in  the  banks  a 
spirit  of  intolerance  of  the  silver  sentiment  of  the  West,  with 
the  final  result  of  driving  the  greater  part  of  his  party,  bag 
and  baggage,  into  the  silver  camp.  In  this  migration  we  may 
leave  them  for  a  time,  and  notice  certain  events  abroad. 

The  Indian  government  was  finding  that  time  added  no  at- 
tractions to  the  experiment  it  had  made  with  the  mints. 
"  Though  silver  was  no  longer  coined,"  wrote  the  Japanese 
Minister  of  Finance  in  1894,  "  its  circulation  suddenly  in- 
creased." A  Hindoo  banker,  writing  in  March,  1894,  gave  a 
very  plausible  explanation.  The  price,  he  said,  had  been  so 
much  lowered  in  England  and  America,  that  100  tolas  of  sil- 
ver, which  cost  106  rupees  once,  could  then  be  purchased  in 
Bombay  for  from  85  to  86  rupees.  As  the  native  derived 
prominence  from  the  amount  of  silver  he  possessed,  it  was  not 
strange  that  a  large  trade  in  bullion  developed,  as  well  as  much 
illicit  minting.  Finally,  the  government  placed  a  5  per  cent, 
import  duty  on  the  metal,  the  standard  of  value  and  the  legal 
tender  of  the  people.  Customs  duties  were  also  placed  on  other 
imports.  In  this  way  exchange  was  brought  somewhat  nearer 
the  fixed  rate,  and  an  indirect  tax  was  levied  on  those  who  could 
not  endure  further  direct  taxation.  The  production  of  the 
country  was  good  during  these  years,  and  in  this  way  the 
Indian  government  worked  along,  but  in  a  condition  no  more 
satisfactory  than  before  the  mints  were  closed.  Meanwhile 
the  leading  journals  complained  loudly,  and  in  England  the 
dissatisfaction  among  the  merchants  dealing  with  India  grew 
rapidly.  The  Bimetallic  League  daily  developed  strength  and 
influence,  and  bimetallism  was  even  made  an  issue  in  parlia- 
mentary elections.  The  tide  rose  high  in  1895. 


THE  MIRBACn  RESOLUTION  FOR  A  CONFERENCE  431 

From  the  time  of  the  adjournment  of  the  Brussels  con- 
ference the  Agrarian  party  in  Germany  had  been  agitating 
for  bimetallism.  A  silver  commission  was  appointed  to  ex- 
amine into  the  effects  of  the  fall  of  silver  on  German  indus- 
tries, and  the  results  greatly  stimulated  the  bimetallic  move- 
ment. Early  in  1895,  Count  von  Mirbach,  the  Agrarian  and 
bimetallic  leader,  undertook  to  secure  a  majority  of  the  Reich- 
stag for  a  demand  for  another  conference  and  for  the  rehabili- 
tation of  silver.  He  quickly  obtained  211  signatures,  or  more 
than  a  majority,  and  on  February  15  submitted  his  motion, 
stating  at  the  outset  of  his  speech  that  "  the  only  way  in  which 
an  international  union  can  be  thought  of  is  on  the  basis  of  a 
fixed  relation  between  gold  and  silver,  established  by  an  inter- 
national treaty."  He  quoted  statistics  to  prove  the  fall  of 
prices  since  Germany  adopted  the  gold  standard,  and  argued 
to  show  that  under  monometallism  agriculture  had  gone  from 
bad  to  worse  in  England  and  Germany,  and  that.  English  ex- 
ports to  silver-using  countries  had  steadily  declined.  Refer- 
ring to  this  country  he  said : 

"  If  there  is  destined  to  be  no  bimetallism,  we  should  wish  the 
American  conditions  to  remain  as  they  are,  although,  in  my  opinion 
they  are  untenable  for  America  for  any  length  of  time.  The  golden 
treasure  of  America  has  dwindled,  has  sunk  in  such  a  way  that  it 
can  no  longer  provide  in  gold  for  covering  its  currency.  Every 
moment  the  gold  reserves  drop  to  the  lowest  ebb  and  the  Secretary 
of  the  Treasury  is  driven  to  have  recourse  to  petty  loans,  which  are, 
no  doubt,  pleasant  enough  to  the  gentlemen  who  furnish  him  with 
the  loans,  for  I,  somehow,  imagine  that  those  who  supply  the  money 
quickly  recover  it  and  then  renew  the  game.  Should  there  be  no 
currency  union,  one  of  two  things  will  happen.  Either  America 
will  address  herself  in  all  earnestness  to  the  establishment  of  a 
currency  and  seek  a  loan  of  $500,000.000  in  gold  in  the  European 
market  —  but  what  of  our  gold  reserves  then?  and  what  of  the  Eng- 
lish Bank  and  all  the  rest?  —  this  alone  shows  how  insufficient  gold 
is,  just  as  soon  as  America  goes  earnestly  to  work.  Or  — and  this 
might  prove  even  more  calamitous  to  us  —  America  will  renounce 
the  coining  of  gold  altogether,  and  go  over  to  the  coining  of  silver. 
Then  we  would  be  confronted  with  differences  in  value  which  would 
threaten  us  more  seriously  than  the  present  conditions.  Then  there 
would  really  remain  no  other  course  than  to  close  ourselves  up 
hermetically  against  America,  and  afford  America  an  opportunity 
to  absorb  the  whole  commerce  with  Asia,  by  virtue  of  the  parity  of 


432  THE  PRESENT  AND  THE  FUTURE 

its  silver  currency  to  that  of  Asia.  I  believe  that  because  things 
are  as  they  are  in  America  we  should  heed  the  warning  and  not 
wait  with  our  hands  in  our  lap;  we  should  take  hold  of  those  things 
before  it  is  too  late." 

He  also  said  that  America  could  actually  absorb  the  Euro- 
pean gold  reserves  and  hold  them  fast,  and  force  a  decision  of 
the  currency  question.  But,  in  view  of  the  situation  then  exist- 
ing in  this  country,  he  considered  such  an  event  too  remote 
to  be  anticipated.  The  reader  will  observe  that  he  did  not 
admit  what  so  many  silver  men  in  this  country  claim,  that  free 
silver  coinage  by  us  alone  would  restore  the  parity.  On  the 
other  hand,  he  believed  it  would  put  us  on  a  parity  with  Asia, 
and  that  what  Europe  would  have  to  fear  in  such  a  case  would 
be  our  competition  with  Europe's  manufactures.  As  a  matter 
of  fact,  European  financiers  have  no  fear  on  this  score.  To 
bring  about  such  a  competition,  especially  in  manufactures, 
there  would  need  to  be  a  fall  in  wages  in  this  country  relative 
to  the  price  of  necessaries  of  life  —  a  matter  which  the  advo- 
cate of  free  silver  in  this  country  carefully  avoids.  Count 
von  Mirbach  was  speaking  at  a  time  when  our  administration 
was  issuing  bonds  to  secure  gold,  and  did  not  anticipate  the 
conditions  of  two  years  later  when,  under  the  same  currency, 
there  would  be  gold  enough  in  the  reserves,  and  abundant 
prospects  of  securing  much  more.  The  fact  that  we  might  by 
absorbing  gold  and  by  a  practical  industrial  policy  hold  it 
fast,  thereby  forcing  a  decision  of  the  question,  doubtless 
seemed  remote  to  many  then. 

Dr.  Lieber,  leader  of  the  Clericals,  and  one  of  the  signers 
of  the  demand,  denned  in  a  brief  declaration  the  attitude  of  his 
party,  and  of  the  neutral  deputies  in  general.  He  said:  "We 
believe  that  the  present  time  is  opportune,  in  view  of  the  uni- 
versal depression  of  economic  life,  to  revive  the  international 
consideration  of  the  problem  affecting  most  vitally  the  trade 
of  the  world."  In  Germany,  the  Radical  and  Social  Demo- 
cratic elements  are  for  the  gold  standard.  They  charged  the 


PASSAGE  OF  THE  MIRBACH  RESOLUTION  IN  THE  REICHSTAG       433 

supporters  of  the  motion  with  working  for  political  and  not 
economic  ends.  Dr.  Theodore  Barth,  of  the  Radical  Union, 
said:  "  This  is  the  agitation  of  the  Agrarian  high-tariff  people 
in  another  guise.  It  is  designed  to  deceive  the  peasants,  to  lead 
them  to  believe  that  the  remedy  for  their  present  distress  is  to 
be  found,  not  in  wholesome  reforms  of  the  land  laws,  but  in  the 
adoption  of  a  double  standard.  Such  an  agitation  is  doomed  to 
failure.  I  do  not  deny  that  another  conference  like  the  one  in 
Brussels  may  be  brought  together,  but  what  of  it  ?  The  confer- 
ence will  result  in  nothing,  as  did  the  meeting  at  Brussels." 

Chancellor  von  Hohenlohe  made  a  conservative  statement, 
but  one  none  the  less  significant.  He  said:  "  It  must  be  con- 
ceded, without  prejudice  to  our  national  currency,  that  the 
growing  disparity  of  value  between  the  two  coin-metals  is  pro- 
ducing a  detrimental  reaction  upon  our  industrial  life.  I  am, 
therefore,  inclined,  in  the  further  pursuit  of  the  endeavors 
which  have  resulted  in  the  convoking  of  the  Silver  Commis- 
sion, to  consider  with  the  confederated  governments  whether 
other  states  which  are  essentially  concerned  in  the  enhance- 
ment of  the  value  of  silver  cannot  be  brought  into  a  friendly 
exchange  of  views  on  mutually  protective  measures." 

Count  von  Mirbach's  motion  passed  by  a  vote  of  more 
than  two  to  one  —  a  striking  fact  when  compared  with  Ger- 
many's refusal  to  participate  in  the  Conference  of  1878,  and 
with  her  expressions  in  other  conferences  of  the  government's 
satisfaction  with  the  monetary  policy  it  had  adopted. 

The  Council  of  State,  under  the  chairmanship  of  Emperor 
"William,  devoted  two  days,  March  14  and  15,  to  the  considera- 
tion of  the  subject,  and  finally  resolved  as  follows: 

"  According  to  the  statement  of  the  Chancellor  during  the  session 
of  the  Reichstag,  February  15  last,  an  exchange  of  views  of  the 
confederated  governments  with  other  states  has  been  proposed  con- 
cerning common  measures  for  obviating  the  detrimental  reaction 
recognized  to  have  resulted  to  industrial  life  from  the  increasing 
disparity  between  the  values  of  gold  and  silver.  In  reference  to 
this  statement,  of  which  the  Council  of  State  has  taken  note  with 
28 


434  THE  PRESENT  AND  THE  FUTURE 

pleasure,  the  same  believes  that  no  further  measures  should  be 
taken  at  the  present  time,  and  that  the  result  of  the  steps  already 
taken  should  be  awaited." 

This  was  an  assurance  that  the  Chancellor  had  taken  the 
matter  into  his  own  hands.  Some  of  the  monometallists  in  the 
Council  endeavored  to  incorporate  in  the  first  part  of  this 
resolution  the  words,  "  without  prejudice  to  the  existing  stand- 
ard," but  this  was  declined,  and  thus  the  statement  was  less 
conservative  than  that  made  by  the  Chancellor  to  the  Reich- 
stag, though  the  Council  is  a  much  more  conservative  body. 
This  action  considerably  aroused  trade  circles.  On  April  4 
at  Berlin,  a  committee  of  the  trade  congress  adopted  the  fol- 
lowing: "The  commercial  and  industrial  circles  must  re- 
gard every  weakening  of  the  well-ordered  gold  standard  in 
Germany  as  a  fundamental  injury  to  German  economic  life." 
An  association  for  the  protection  of  the  gold  standard  was 
formed,  and  the  Chambers  of  Commerce  generally  declared 
against  bimetallism.  But  the  government  would  eagerly  have 
entered  a  bimetallic  union  had  England  led  the  way. 

The  events  in  England  at  this  time  were  quite  as  remarka- 
ble. On  February  26,  Robert  L.  Everett,  a  member  of  the 
Liberal  party,  introduced  in  the  Commons  the  following  reso- 
lution : 

"  That  this  House  regards  with  increasing  apprehension  the  con- 
stant fluctuations  and  growing  divergence  in  the  relative  value  of 
gold  and  silver,  and  heartily  concurs  in  the  expressions  of  opinion 
on  the  part  of  the  government  of  France  and  the  government  par- 
liament of  Germany,  as  to  the  serious  evils  resulting  therefrom.  It, 
therefore,  urges  upon  Her  Majesty's  government  the  desirability  of 
co-operating  with  other  powers  in  an  international  conference  for 
the  purpose  of  considering  what  measures  can  be  taken  to  remove 
or  mitigate  these  evils." 

Sir  William  Ilarcourt,  Chancellor  of  the  Exchequer,  said 
he  had  never  denied  the  existence  of  evils  in  consequence  of 
the  growing  divergence  of  the  values  of  gold  and  silver.  Eng- 
land had  not  refused  to  co-operate  when  other  countries  had 
desired  a  monetary  conference.  But  the  majority  of  the  Euro- 
pean countries  had  declared  in  favor  of  a  monometallic  cur- 


THE  POSITION  OF  FRANCE  435 

rency  at  the  Brussels  conference.  He  did  not  think  Germany 
had  changed  her  opinion.  When  a  proposal  frqm  Germany  or 
any  other  country  reached  the  government,  it  would  be  time 
enough  to  consider  the  question  of  England  joining  another 
conference.  A  misconception,  he  said,  existed  in  regard  to  the 
cause  of  the  failure  of  the  Brussels  conference.  The  gov- 
ernment of  the  United  States  in  proposing  that  meeting  ex- 
pressed a  wish  that  it  be  held  with  a  view  to  establish  a  ratio 
of  values  of  gold  and  silver,  by  the  leading  nations,  by  means 
of  the  free  coinage  of  silver  in  their  respective  mints.  Eng- 
land, said  Harcourt,  could  not  accept  an  invitation  couched  in 
such  terms,  and  he  could  not  then  enter  into  a  matter  which 
impeached  the  first  principles  of  English  currency.  The  pro- 
posals had  then  turned  to  means  for  a  larger  use  of  silver,  and 
this  policy  the  British  delegates  had  supported.  Harcourt  an- 
nounced at  the  close  of  his  speech  that  he  would  not  oppose 
the  Everett  resolution,  and  it  was  passed  by  a  unanimous  vote. 
Neither  side  could  afford  to  make  a  party  question  of  it,  for 
a  large  section  of  both  were  affected  by  the  bimetallic  propa- 
ganda. 

Such  events  in  England  and  Germany  were  necessarily  re- 
flected in  French  opinion.  The  indifference  of  France  at  the 
Brussels  conference  was,  as  has  been  seen,  due  largely  to  the 
fact  that,  after  a  long  struggle,  the  Bank  of  France  had  ac- 
quired an  ample  stock  of  gold  to  counterbalance  its  large  stock 
of  silver,  and  to  a  consequent  disposition  to  avoid  further  in- 
crease in  silver  coinage.  After  the  conference  the  bank  con- 
tinued to  accumulate  gold,  and  at  this  time  held  the  enormous 
sum  of  $411,000,000,  though  its  stock  of  silver  was  still  about 
$330,000,000.  In  stating  the  position  of  his  government,  the 
French  Minister  of  Finance  was  reported  as  saying  that  he 
agreed  with  the  claims  of  the  bimetallists  that  the  abandon- 
ment of  the  mintage  of  silver  had  proved  extremely  disastrous, 
though  he  did  not  attribute  the  agricultural  crisis,  in  all  its 


436  THE  PRESENT  AND  THE  FUTURE 

length  and  breadth,  solely  to  the  suspension  of  the  free 
coinage  of  silver.  But  he  believed  that  the  abandonment 
of  bimetallism,  coinciding  with  other  causes,  had  precipi- 
tated the  crisis  and  given  it  a  far  graver  character  than  it 
would  have  otherwise  had.  France  alone,  he  said,  could  not 
solve  the  problem.  If  she  attempted  to  do  so,  she  would  have 
to  pay  all  the  cost  of  the  solution.  He  pointed  out  that,  in  the 
countries  up  to  that  time  most  attached  to  the  monometallic 
system,  and  notably  in  England,  a  current  of  opinion  in  favor 
of  a  serious  attempt  to  find  a  remedy  for  the  crisis  was  being 
developed,  and  the  action  of  the  Manchester  Chamber  of 
Commerce  in  demanding  that  by  some  means  the  value  of 
silver  be  restored  he  considered  an  important  event.  He 
added:  "  We  may  differ  in  opinion  as  to  the  precise  methods 
to  be  employed,  but  I  believe  that  in  England  and  Germany 
there  is  a  genuine  movement  in  favor  of  the  resumption  of 
the  coinage  of  silver.  I  cannot  say  at  what  moment  this  prog- 
ress will  be  sufficiently  decisive  to  finally  overpower  the  re- 
sisting forces,  which  are  great.  In  such  a  position  what  should 
be  the  attitude  of  the  French  government?  We  were  sum- 
moned in  1892  to  a  conference  at  Brussels,  which  unfort- 
unately, has  been  without  result  and  has  been  adjourned  in- 
definitely. Although  I  have  been  Minister  of  Finance  but  a 
few  days,  I  have  already  discussed  this  question  with  my  col- 
league, the  Minister  of  Foreign  Affairs.  We  are  completely 
in  accord.  Although  I  believe  that  France  cannot  alone  settle 
the  question,  I  am  of  opinion  that  she  ought  not  to  restrict  her- 
self to  an  attitude  of  indifference  in  waiting.  She  ought  to  in- 
dicate in  a  marked  manner  that  she  desires  to  hasten  the  solu- 
tion. She  ought  to  assume  an  attitude  which  will  encourage 
the  movement  of  public  opinion  in  neighboring  countries. 
This  is  the  policy  which  the  Minister  of  Foreign  Affairs  will 
adopt  and  which  I  have  adopted." 

The  National  Bimetallic  League  of  France  had  meanwhile 


BALFOUR'S  ADDRESS  TO  THE  BIMETALLIC  LEAGUE  437 

lost  none  of  its  importance.  Loubet  was  its  president,  and 
among  its  vice-presidents  were  Magnin,  Governor  of  the  Bank 
of  France,  De  Normandie,  Cernuschi,  Meline,  Senator  Beren- 
ger,  and  Guichard,  president  of  the  Suez  Canal  Company. 
But  the  league  did  not  advocate  action  by  France  or  any  other 
country  alone.  The  annual  meeting  of  the  league  was  held  in 
April,  and  a  statement  made  by  the  venerable  Cernuschi  indi- 
cated the  true  position  of  international  bimetallists: 

"  As  soon  as  the  coinage  of  silver  by  the  United  States  was  free, 
Europe  would  act  towards  the  United  States  just  as  Germany  acted 
towards  France,  so  long  as  France  coined  silver.  Europe  would  de- 
monetize large  masses  of  silver  and  send  them  to  Philadelphia  to 
get  them  made  into  dollars,  with  which  dollars  she  could  get  gold 
dollars  despatched  to  her.  Very  venturesome  would  be  those  who 
should  recommend  the  United  States  of  America  to  undertake, 
single-handed,  what  France  will  undertake  only  triple-handed." 

The  annual  meeting  of  the  English  Bimetallic  League  was- 
held  at  the  Mansion  House,  London,  April  3,  and  the  notable 
feature  was  the  speech  of  Balfour,  the  Conservative  leader  of 
the  House  of  Commons,  in  favor  of  international  bimetallism. 
The  following  extract  indicates  its  character: 

"  They  talk  of  the  excellence  of  the  British  system  of  currency. 
What  is  the  British  system  of  currency?  We  are  an  empire,  as  we 
are  proud  to  think,  with  interests  and  with  possessions  in  every  part 
of  the  world.  I  concentrate  my  attention,  not  upon  the  self-govern- 
ing colonies,  which,  for  purposes  of  currency,  may  be  described  as 
independent  of  us,  but  upon  those  great  portions  of  our  great  em- 
pire which  are  practically  under  the  rule  of  the  British  parliament; 
and  what  is  the  system  of  currency  prevailing  in  them?  Or  is  there 
a  system  of  currency?  You  go  to  Hong  Kong  and  the  Straits 
Settlements.  You  find  thei'e  that  obligations  are  measured  and 
debts  are  paid  in  silver.  You  come  to  England  and  you  find  that 
obligations  are  measured  and  debts  are  paid  in  gold.  You  stop  half- 
way—  in  India  —  and  you  find  that  obligations  are  measured  and 
debts  are  paid  in  something  which  is  neither  gold  nor  silver,  but  is 
the  strangest  product  of  monometallic  ingenuity  which  the  world  has 
ever  seen  —  a  currency  which  is  as  arbitrary  as  any  forced  paper 
currency  of  which  the  world  has  ever  heard,  and  which  is  as  ex- 
pensive as  any  metallic  currency  the  world  has  ever  heard  of,  which, 
happily,  combines  in  itself  all  the  disadvantages  of  every  system  of 
currency  which  human  beings  have  ever  tried  before.  That  is 
what  we  call  the  British  system  of  currency. 

"  I  do  not  believe  that  the  common-sense  of  nations  will  long 
tolerate  such  a  state  of  things.  When  I  look  to  what  is  going  on  in 
America,  in  Germany,  and  in  France  —  nay,  when  I  look  to  what  is 
going  on  even  in  the  most  conservative  commercial  centres  in  this 


438  THE  PRESENT  AND  THE  FUTURE 

country  —  I  say  to  myself  that  the  reproach  which  is  now  upon  us 
cannot  surely  be  of  long  duration,  and  that  the  time  is  not  far  dis- 
tant when  men  of  all  parties,  of  all  occupations,  and  of  all  interests 
will  combine  to  say  that  it  is  our  business  to  do  our  best,  at  all 
events,  to  bring  to  an  end  a  reproach  to  our  common  civilization  and 
to  introduce  into  our  international  transactions  some  medium  of  ex- 
change less  open  to  criticism,  less  destructive  of  settled  industry, 
less  embarrassing  to  the  merchant  than  the  absurd  system  under 
which  it  is  our  present  misfortune  to  live." 

Such  a  state  of  feeling  in  Europe  naturally  had  some  effect 
in  this  country.  Soon  after  the  action  of  the  Reichstag,  Sena- 
tor Wolcott,  of  Colorado,  offered  an  amendment  to  the  Sundry 
Civil  bill  looking  to  the  appointment  of  delegates  to  an  inter- 
national conference  if  called  by  one  of  the  European  govern- 
ments. It  authorized  the  appointment  of  three  delegates  by 
the  President,  and  six  others  to  be  "  a  joint  committee  of  this 
Congress,  three  of  said  committee  to  be  members  of  the  Senate 
and  three  of  the  House  of  Representatives."  The  Senate  be- 
fore adjourning  named  Senators  Teller  of  Colorado,  Jones  of 
Arkansas,  and  Daniel,  of  Virginia  —  all  radical  silver  men. 
The  House  requested  Speaker  Crisp  to  name  himself,  which 
he  did,  filling  up  the  quota  with  Culberson,  of  Texas,  and 
Ilitt,  of  Illinois.  Of  all  these  men,  Hitt  was  the  only  one 
who  had  not  advocated  the  free  coinage  of  silver  by  the 
United  States  alone. 

Another  international  conference  seemed  to  be  at  hand. 
In  our  financial  circles,  the  wisest  men  thought  that  the  senti- 
ment in  England  and  Germany  was  such  that  one  of  those 
governments  would  make  a  proposition.  Never  had  an  inter- 
national agreement  seemed  so  likely.  But  our  curious  fatality 
again  put  in  its  appearance.  As  has  been  said,  the  policy  of 
the  President  was  by  this  time  driving  his  party  into  the  silver 
camp.  Bitter  against  the  banks  and  the  bond  syndicate,  over- 
whelmed by  a  severe  defeat  in  the  state  elections  of  November, 
disgusted  with  the  effects  of  the  new  tariff  bill,  shorn  of  every 
issue  on  which  the  party  had  won  a  victory  in  1 892,  the  Demo- 
cratic masses  turned  naturally  to  the  only  issue  which  seemed 


EFFECTS  OF  THE  "SILVER  CRAZE"  OF  1895  439 

available,  and  the  leaders  accepted  it  as  the  only  hope  of 
future  salvation.  At  the  very  time  when  there  seemed  at  last 
to  be  a  chance  for  bimetallism,  a  veritable  "  silver  craze  "  set  in 
everywhere  outside  of  the  New  England  and  Middle  States. 
The  party  organs  clamored  loudly  for  free  coinage.  A  West- 
ern lawyer  who  had  been  studying  the  subject  brought  forth 
"  Coin's  Financial  School,"  fancifully  illustrated,  and  thou- 
sands of  the  little  pamphlets  went  broadcast  over  the  land. 
It  became  the  topic  of  the  day.  Our  gravest  economists  con- 
descended to  answer  its  arguments,  and  the  papers  were  full 
of  it.  Congress  had  adjourned  in  March.  Otherwise  there 
would  doubtless  have  been  another  free-silver  bill  and  a  dis- 
cussion. 

Of  course,  under  such  circumstances,  no  proposition  came 
from  Europe.  The  bimetallic  tide  suddenly  receded,  and  the 
President  had  no  occasion  to  complete  the  commission  Con- 
gress had  authorized.  Genuine  as  were  the  pleas  of  the  Euro- 
pean bimetallists  for  a  conference,  severe  as  were  the  embar- 
rassments of  the  different  governments,  no  government  could 
be  made  to  act  while  such  a  silver  furor  was  sweeping  this 
country.  They  at  once  drew  back  into  their  attitude  of  ex- 
pectancy. The  London  Statist,  commenting  on  the  affair, 
said  that  there  was  no  telling  what  the  voters  of  the  United 
States  would  do  next. 

The  administration  labored  along  on  the  theory  that  a 
gold  reserve  could  not  be  maintained  so  long  as  notes  redeema- 
ble in  gold  were  outstanding,  which  was  equivalent  to  saying 
that  so  long  as  the  people  had  a  redeemable  currency  the  gov- 
ernment could  not  insure  a  stock  of  the  redeeming  metal.  In 
his  message  to  the  new  Congress  which  convened  on  December 
2,  1895,  the  President  dwelt  at  length  on  the  legal-tender 
note  and  its  influence,  as  he  saw  it1,  on  the  gold  reserve.  There 
was,  however,  no  suggestion  of  a  deficit  in  the  revenues  of  the 
government,  though  it  was  constantly  accruing,  and  from  the 


440  THE  PRESENT  AND  THE  FUTURE 

first  of  the  year  already  amounted  to  $36,000,000.  As  has 
been  explained,  it  was  the  deficit  and  nothing  else  which  pre- 
vented the  government  from  taking  the  surplus  currency  in 
the  hands  of  the  people  and  holding  it  till  business  revived. 
Within  twenty-two  months  the  government  had  obtained  from 
three  bond  sales  $182,000,000.  Had  it  been  simply  a  question 
of  exchanging  gold  for  legal  tenders,  as  the  administration 
argued,  the  net  cash  balance  in  the  Treasury  at  the  end  of  that 
period  (December  1)  should  have  exceeded  that  at  the  begin- 
ning by  just  that  amount.  On  the  contrary,  the  net  cash  bal- 
ance had  increased  only  $93,000,000.  Between  the  first  and 
second  bond  sales  the  Treasury  lost  more  than  $35,000,000 
of  its  cash  balance;  between  the  second  and  third  more  than 
$21,000,000,  and  from  the  third  to  the  meeting  of  Congress 
$32,000,000  more.  Had  this  sum  of  $88,000,000  been  a  sur- 
plus instead  of  a  deficit,  there  would  have  been  very  little  trou- 
ble. Although  the  bond  sales  considerably  contracted  the  cur- 
rency, not  till  after  the  extensive  popular  loan  of  February, 
1896,  did  currency  become  sufficiently  contracted  to  prevent  it 
from  constantly  returning  for  the  Treasury's  gold. 

It  was  another  anomaly  of  the  situation  that  the  Treasury, 
under  the  revised  tariff,  was  looking  for  relief  from  deficits  in 
the  same  direction  whence  a  further  drain  of  gold  by  export 
might  be  expected.  Here  was  another  vicious  circle;  there 
must  be  an  increase  of  imports  of  merchandise  to  add  to  our 
revenues  when  the  already  existing  volume  of  imports  was 
enough  to  justify  gold  exports. 

The  doctrine  of  a  protective  tariff  may  be  contrary  to  the 
classical  economic  notions  of  a  perfectly  ideal  commercial 
condition  of  things.  It  would  evidently  be  out  of  place  for  a 
country  like  England,  whose  foreign  investments,  according  to 
a  recent  English  authority,  amount  to  $15,000,000,000,  which 
means  that,  as  a  creditor  of  the  world,  she  demands  a  yearly 
return  in  gold  of  some  $450,000,000  at  least.  The  position  of 


ANOTHER  FREE-SILVER  BILL  IN  CONGRESS  441 

the  United  States  is  so  different  that  they  must  pay  a  part  of 
this  return  —  not  less  probably  than  $75,000,000  annually  - 
in  interest  and  dividends.     An  ideal  theory  can  not  fit  two 
such  diverse  conditions.1 

The  House  of  Representatives  elected  in  the  sweeping 
Republican  victory  of  1894  had  a  large  Republican  majority, 
but  the  Senate  was  more  than  ever  a  silver  body.  While  the 
Republicans  in  the  lower  chamber  felt  it  incumbent  upon 
them  to  undertake  some  remedy  for  the  situation,  the  remedy 
which  from  their  party  position  they  would  naturally  propose 
would  be  sure  to  meet  the  disapproval  of  the  President,  and, 
moreover,  a  national  election  was  but  eleven  months  off,  and  in 
a  general  way  the  inability  of  the  administration  to  mend  mat- 
ters would  naturally  be  to  Republican  advantage.  Pursuant 
to  the  President's  suggestion,  however,  a  bond  bill  was 
framed  and  passed,  but  in  the  Senate  was  quickly  transformed 
into  a  free-silver-coinage  bill  by  a  vote  of  42  to  35.  As  thus 
modified,  the  measure  called  for  the  free  and  unlimited  coin- 
age of  silver  dollars  at  16  to  1,  the  coinage  of  the  seigniorage 
on  the  bullion  in  the  Treasury,  and  the  immediate  issue  of  sil- 
ver certificates  to  represent  such  seigniorage  pending  its  coin- 
age. This  would  have  involved  an  inflation  of  about  $100,- 
000,000,  as  soon  as  the  printing-presses  and  the  mints  could 
complete  the  work.  The  bill  also  provided  for  the  redemption 

i  In  the  examination  of  Robert  Hardie.  of  the  Council  of  India, 
by  the  Indian  Currency  Commission  !n  1892.  this  dialogue  occurred: 

"  Q.  Has  the  balance  of  exports  over  imports  become  less  or 
greater  than  it  was?  A.  It  is  greater,  because  the  Indian  council 
bills  are  greater,  and  the  amount  of  silver  that  is  going  into  India 
just  now  is  rather  greater.  I  rather  take  the  view  that  hardly  any 
country  with  a  large  foreign  debt  is  in  a  position  to  maintain  a  gold 
standard  without  some  special  means  to  insure  that  her  balance  of 
exports  will  be  in  excess  of  her  imports  to  a  sufficient  extent  to  pay 
for  the  foreign  debt,  and  that  special  means  seems  to  me  to  be  a 
protective  tariff. 

"  Q.  But  all  the  colonies  have  not  import  duties.  New  South 
Wales  has  no  great  import  duties.  A.  Well,  I  believe  she  has  been 
carrying  on  her  financial  system  by  loans  in  England." 


442  THE  PRESENT  AND  THE  FUTURE 

of  greenbacks  and  treasury  notes  with  gold  coin  or  silver  dol- 
lars. The  result  was  a  permanent  disagreement  between  the 
two  houses,  and  nothing  was  done.  This  was  doubtless  fortu- 
nate. The  forces  were  gathering  for  an  open  battle  of  the  peo- 
ple at  the  polls.  The  issue  was  to  be  squarely  carried  to  the 
court  of  last  resort,  and  Europe,  always  supplied  with  fresh  am- 
munition for  its  attitude  of  expectancy,  continued  to  wait  —  to 
see  what  the  voters  would  do  next. 

They  performed  the  greatest  service  for  the  cause  of  in- 
ternational bimetallism,  probably,  which  its  unfortunate  his- 
tory thus  far  records.  They  deprived  Europe's  attitude  of 
expectancy  of  much  of  its  rational  basis,  showing  to  those  who 
do  not  readily  understand  us  or  our  institutions  that,  however 
frequently  or  persistently  inclined  our  people  may  seem  to 
advocate  an  unwise  course  for  securing  their  ends,  they  acquit 
themselves  judiciously  when  it  comes  to  the  critical  point  of 
actually  accepting  or  rejecting  the  unwise  course.  To  be  sure 
the  issue  was  clouded  somewhat  by  other  elements,  but  that  is 
always  a  feature  of  our  political  life,  and  sometimes  a  saving 
one. 

While  the  Democratic  party,  to  avoid  bankruptcy  as  to 
principles,  eagerly  embraced  the  advocacy  of  the  free  coinage 
of  silver,  to  secure  further  support  it  took  up  with  a  lot  of 
notions  which  the  greatest  exigencies  of  its  long  career  had 
never  forced  upon  it  before.  It  made  a  broad  appeal  to  all 
the  discontented  and  disgruntled,  and  they  were  many  after 
such  a  business  depression,  and  after  such  an  unwise  policy  as 
the  administration  had  pursued.  It  linked  an  impure  socialism 
to  an  indiscreet  and  blatant  silverism.  It  appealed  largely  to 
the  passions  of  such  as  were  easily  influenced  by  unpleasant 
conditions  and  too  easily  deceived  as  to  their  real  cause. 

The  strength  of  the  other  side  consisted  in  those  whose 
opinions,  at  least  in  the  beginning,  were  influenced  less  by  the 
currency  question  than  by  the  policy  of  a  protective  tariff.  In 


RESULT  OF  THE  ELECTION  OF  189C  443 

this  they  were,  perhaps,  wiser  than  they  knew,  for  the  cardinal 
fact  that  a  protective  tariff  is  needed  in  this  country  to  main- 
tain a  sound  currency  was  generally  overlooked.  Undeceived 
in  1893  by  the  legitimate  fruition  of  the  sort  of  tariff  reform 
for  which  many  had  voted  in  1892,  under  the  promise  of  a 
"  golden  era  of  trade  emancipation,"  the  sturdy  farmers,  me- 
chanics, and  laborers  turned  to  the  Republican  party  in  1894, 
and  saw  in  William  McKinley  the  most  conspicuous  exponent 
of  the  policy  they  desired  in  the  future.  It  did  little  good  for 
those  Republicans  in  the  East,  who,  for  political  reasons,  pre- 
ferred another  candidate,  to  exploit  the  theory  that  he  was  not 
a  thorough  advocate  of  gold.  It  is  safe  to  say  that  no  presiden- 
tial candidate  could  secure  a  vote  of  respectable  dimensions  in 
this  country  if  standing  without  qualification  for  an  exclusive 
gold  standard  and  nothing  else.  The  word  "  gold" — as  if  alone 
it  had  saving  qualities  —  was  inserted  in  the  St.  Louis  plat- 
form after  an  almost  ridiculous  struggle,  but  a  renewal  of 
efforts  for  international  bimetallism  was  also  demanded. 
While,  however,  the  tariff  and  McKinley's  personality  were 
the  dominating  influences  early  in  the  campaign,  the  noise  was 
made  over  the  question  of  gold  and  silver.  The  more  one  side 
shouted  for  silver,  the  more  the  other  shouted  for  gold,  till  at 
last  the  subject  developed  into  the  apparent  issue.  It  was 
fortunate  for  the  cause  of  bimetallism  that  it  did  so. 

For  the  first  time  in  twenty  years,  or  since  we  began  to  im- 
portune for  international  bimetallism,  Europe  was  given  to 
understand  that  there  was  little  hope  for  free  coinage  of  silver 
,  here  without  free  coinage  abroad.  With  the  inauguration  of  a 
policy  better  adapted  to  our  economic  conditions,  the  crisis 
which  continually  threatened  the  Treasury  has  passed,  gold 
accumulates  in  its  vaults,  occasional  exports  excite  no  alarm, 
and  business  is  asking  for  the  very  currency  which  but  a  little 
time  ago  Congress  was  asked  to  cancel  for  the  salvation  of 
our  credit.  This  currency  no  longer  acts  like  a  chain  pump  on 


444  THE  PRESENT  AND  THE  FUTURE 

our  gold  reserve,  but  gold  is  being  returned  to  secure  the  cur- 
rency. This  movement  will  become  more  marked  when  the 
revenues  have  again  grown  to  exceed  our  expenditures,  for 
the  supply  of  the  currency  has  been  cut  off,  and  for  the  needed 
expansion  we  must  depend  upon  the  national  banks  and  the 
increase  in  our  gold  stock.  For  nearly  twenty  years  the  gov- 
ernment of  the  United  States  carried  on  a  limited  coinage  of 
silver  to  save  itself  from  a  threatening  sentiment  for  unlimited 
coinage.  It  had  repeatedly  gone  to  international  monetary 
conferences  as  a  suppliant,  always  on  the  point  of  being  forced 
by  its  people  to  undertake  alone  that  for  which  it  asked  Euro- 
pean co-operation.  Europe  has  naturally  waited  while  we 
absorbed  most  of  our  own  production  of  silver  in  the  expecta- 
tion that  we  would  settle  its  monetary  troubles  by  absorbing 
more. 

Even  if  we  should  unwisely  continue  to  importune  Europe 
in  behalf  of  bimetallism,  we,  at  least,  stand  in  a  more  com- 
manding position,  and  our  only  mistake  can  be  made  in  sur- 
rendering it  to  satisfy  those  who  argue  that  an  American  initia- 
tive is  all  that  is  needed  to  induce  European  states  to  adopt 
bimetallism,  and  that  free  coinage  of  silver  would  give  us  com- 
mand of  the  Asiatic  markets.  The  adoption  of  the  silver 
standard  by  the  United  States,  and  that  is  what  the  unlimited 
coinage  of  silver  by  us  alone  means,  is  exactly  what  European 
creditor  nations  seek  as  a  means  of  enabling  them  to  maintain 
an  appreciating  gold  standard.  They  have  no  fear  of  our 
monopolizing  the  Asiatic  markets  so  long  as  they  can  compel 
the  payment  of  deferred  obligations  in  gold,  or  at  a  rate  of 
exchange  requiring  silver  nations  to  make  up  the  difference 
in  the  value  of  silver  and  gold.  They  have  never  failed  to  ap- 
preciate the  advantages  of  a  gold  standard,  if  other  and  es- 
pecially the  great  debtor  nations  were  kept  upon  a  silver  basis. 
Neither  have  they  failed  to  appreciate  the  dangers  of  the  situa- 
tion if  these  productive  debtors  sought  for  gold. 


THE  DRIFT  TOWARDS  THE  OOLD  STANDARD  445 

But  these  debtor  nations  could  not  be  kept  in  their  seats. 
The  movement  for  the  gold  standard  once  started  must  con- 
tinue on  in  its  inevitable  course.  If  accidental  conditions  pro- 
duce a  discord  in  the  coinage  of  the  world,  commerce  will  not 
forever  brook  it,  and  governments  in  the  stress  of  making  up 
their  budgets  will  not  rest  content.  So  nations  which  have  been 
pleading  for  the  restoration  of  silver  have  one  by  one  adopt- 
ed the  gold  standard,  or  have  become  well  advanced  in  the 
process. 

The  Austrian  reform  is  nearly  complete,  our  recent  losses 
in  gold  having  been  to  her  great  advantage.  Russia  has  also 
profited  by  our  Iosses2  and,  though  loaded  with  debt,  has 
adopted  gold.  Japan  follows  her  victory  over  China,  as  Ger- 
many did  hers  over  France,  by  establishing  the  coveted  stand- 
ard. Even  the  little  republics  of  Costa  Rica  and  San  Salva- 
dor have  recently  joined  the  procession,  and  the  South  Ameri- 
can states  are  showing  a  strong  desire  to  fall  in  behind  Chili, 
which  adopted  gold  in  1895.  The  demands  thus  created,  how- 
ever, have  not  fallen  entirely  upon  the  United  States.  Eng- 
land has  grown  no  richer  in  the  yellow  metal,  though  com- 
manding so  many  sources  of  supply.  The  gold  in  the  Austro- 
Hungarian  bank  now  exceeds  that  in  the  Bank  of  England, 
and  the  Bank  of  France  holds  more  than  both,  while  the  im- 
mense chest  Russia  had  filled  is  regarded  as  anything  but  an 
offering  to  peace. 

The  natural  conclusion  from  the  general  movement  tow- 
ards a  gold  standard  is  that  governments  are  seeking  advan- 
tages which  they  cannot  find  in  adhering  to  silver.  In  their 
development  they  need  capital,  but  the  collection  of  taxes  in 
silver  for  the  payment  of  foreign  obligations  in  gold,  in  view 
of  the  disparity  in  the  value  of  the  metals,  imposes  a  burden 
on  the  government,  though  for  all  the  purposes  of  internal 
trade  and  industry  the  silver  standard,  or  even  a  basis  of  in- 
convertible paper,  may  have  occasioned  no  apparent  incon- 


446  THE  PRESENT  AND  THE  FUTURE 

veniences  among  the  people,  may  even  have  seemed  to  some 
a  blessing. 

There  is  a  distinction  to  be  carefully  noted  between  the 
requirements  of  the  government  and  those  of  the  people  gov- 
erned. The  native  of  India,  for  example,  has  found  no  fault 
with  his  depreciated  rupee  till  recently.  It  is  claimed  that 
Japan  has  prospered  greatly  by  its  long  use  of  silver,  and  in 
changing  to  a  gold  standard  the  government  has  been  com- 
pelled to  change  its  gold  coins  to  correspond  with  the  gold 
value  of  the  silver  coin  previously  the  standard;  the  value  of 
the  gold  in  the  gold  yen  having  been  reduced  one-half.  It  is 
doubtful  if  the  people  would  have  tolerated  the  reverse  opera- 
tion. 

The  difficulty  of  at  once  raising  the  standard  of  value  to 
which  the  people  have  become  accustomed  is  evident  from  the 
experience  of  Russia.  It  was  made  known  by  imperial  edict 
that  a  5-rouble  gold  piece  would,  until  further  notice,  be  equal 
to  7  roubles  and  50  copecks  in  paper  currency,  so  that  a 
check  drawn  on  a  Russian  bank  for  75  roubles  might  be  con- 
sidered paid  should  the  holder  receive  50  roubles  in  gold.  But 
when  the  peasants  were  offered  a  5-rouble  gold  piece  in  pay- 
ment of  a  debt  due  them  for  7  roubles  and  50  copecks,  they  re- 
fused to  accept  it,  pointing  out  that  stamped  upon  it  in  plain 
Russian  were  the  words  "  5  roubles."  They  naturally  de- 
manded to  know  why  they  were  expected  to  believe  that  twice 
two  and  a  half  made  7  roubles  and  50  copecks  in  money  or 
anything  else.  As  an  indication  of  how  easily  such  difficulties 
are  overcome  in  Russia,  it  is  reported  that  the  government 
has  recoined  the  same  5-rouble  gold  pieces  and  stamped  on 
them  "  7  roubles,  50  copecks." 

Japan  and  Russia,  therefore,  have  attempted  to  adopt  the 
gold  standard  on  the  basis  of  their  previously  depreciated  cur- 
rency. Such  a  method  will  not  probably  cause  any  inconven- 
ience in  internal  transactions,  as  the  engagements  and  contracts 


THE  FINANCIAL  POLICY  OF  JAPAN  447 

have  been  made  on  the  silver  or  paper  basis,  but  its  operation  in 
foreign  transactions  remains  to  be  developed. 

How,  it  may  bo  asked,  is  the  government  of  Japan  to  derive 
any  benefit  from  the  gold  standard  in  the  payment  of  foreign 
obligations  in  gold  countries  if  the  yen  is  still  to  be  reckoned  at 
its  silver  value  ?  Must  not  the  same  amount  of  money,  as  re- 
lated to  the  price  of  commodities,  be  raised  in  taxes  to  settle  in 
gold  abroad?  Undoubtedly  the  amount  required  will  be  as 
great  so  long  as  silver  falls  no  lower,  but  the  Japanese  have  at 
least  fixed  a  stable  par  of  exchange  with  gold  countries  by  mak- 
ing the  standard  gold  instead  of  silver.  If  silver  falls,  the  re- 
duced gold  yen  will  still  be  a  fixed  measure  of  value,  and  the 
silver  currency,  so  long  as  the  government  redeems  in  gold, 
must  take  the  place  of  a  token  currency.  Moreover,  the  credit 
of  Japan  in  gold  countries  will  be  strengthened.  That  is  evi- 
dently the  objective  point.  Foreign  capital  will  be  more 
readily  obtained  and  on  better 'terms. 

The  Japanese  financiers  are  of  a  high  order  of  intelligence 
and  economic  education,  and  they  have  the  management  of 
their  currency  in  their  own  hands.  If  they  have  other  motives 
in  adopting  the  gold  standard  they  arc  not  plain.  It  is,  how- 
ever, implied  in  the  following  from  the  Japan  Weekly  Mail 
of  March  6,  1897,  that  they  are  making  110  calculations  upon 
the  further  decline  of  silver,  and  are  actuated  by  motives  of  a 
different  character: 

"  As  we  understand,  Japan's  change  to  gold  monometallism  is 
dictated  chiefly  by  the  conviction  that  silver  has  reached  virtually  its 
lowest  point,  and  that  its  sterling  price  may  be  expected  to  appreciate 
largely  within  the  next  few  years.  Her  financiers  would,  probably, 
decline  to  reckon  the  chances  of  precisely  the  opposite  contingency. 
They  are  fully  sensible  of  the  great  advantages  that  their  country's 
industry  and  commerce  have  derived  from  the  employment  of  a  cur- 
rency constantly  depreciating  in  terms  of  the  currency  of  the  markets 
where  they  sell  their  commodities.  But  they  think  that  they  have 
drunk  the  depths  of  that  well  of  prosperity  and  that  the  time  has 
now  come  to  guard  themselves  against  the  upward  swing  of  the 
silver  pendulum.  In  short,  they  have  been  made  rich  by  silver 
that  cheapened  steadily  in  terms  of  gold,  and  now,  thinking  that  the 
Occident  inclines  toward  bimetallism,  they  want  to  be  made  richer 


448  THE  PRESENT  AND  THE  FUTURE 

by  gold  that  cheapens  steadily  in  terms  of  silver.  It  has  been  said 
that  Japan  is  the  child  of  fortune.  If  this  new  experiment  succeeds, 
who  can  deny  her  right  to  the  title?  " 

It  would  be  unsafe  to  take  this  as  representing  the  real 
opinion  of  the  Japanese  financiers,  at  least  before  making 
sure  that  the  statement  had  not  behind  it  a  certain  prejudice 
for  the  old  silver  standard,  or  for  the  doctrine  of  international 
bimetallism.  Indeed,  the  same  journal  suggests  that  possibly 
a  stronger  reason  for  the  step  is  that  her  financiers  wish  to  place 
Japan  within  reach  of  the  stores  of  cheap  capital  awaiting 
investment  in  the  Occident.  Her  financiers  have  seen  enough 
of  Indian  affairs  to  convince  them  of  the  difficulty  of  collect- 
ing taxes  in  silver  to  pay  debts  in  gold  at  uncertain  rates  of 
exchange.  Japan  has  started  out  to  make  herself  a  great  mari- 
time power,  and  this  requires  money. 

If  the  world  drifts  along  without  the  inauguration  of  an 
international  policy  as  to  monetary  standards,  the  end  of  silver 
demonetization  is  not  yet,  nor  is  it  safe  to  say,  even  with  greatly 
increased  gold  production,  that  a  scarcity  of  the  yellow  metal 
is  an  experience  only  of  the  past.  The  backward  nations  are 
coming  forward  rapidly.  If  they  have  prospered  under  a  de- 
preciating currency,  they  have  also  learned  that  such  pros- 
perity has  its  limits,  and  that,  while  it  exists,  its  fruits  must 
more  and  more  be  torn  from  the  hands  of  the  producers  to 
satisfy  the  requirements  of  the  budget.  The  people  may  pro- 
ceed a  long  time  in  the  belief  that  they  are  reaping  a  great 
profit  from  selling  in  gold  countries,  and  they  may  submit  fre- 
quently to  new  burdens  of  taxation,  but  the  rulers  perceive 
in  this  an  element  of  grave  danger.  A  poor  harvest,  or  a  sud- 
den fall  in  exchange  may  create  a  deficit,  and  the  government, 
before  devising  fresh  taxation,  must  borrow.  So,  little  by 
little,  a  foreign  debt  grows  up,  and  the  government  appreciates 
that  the  time  must  inevitably  come  when  all  the  possible  com- 
pensations derived  from  increased  production  and  exports,  be- 
cause of  a  depreciating  standard,  must  be  confiscated  in  taxa- 


FINANCIAL  AND  COMMERCIAL  SITUATION  IN  MEXICO  449 

tion  to  satisfy  the  foreign  creditor.  How  long  will  the  people 
remain  satisfied? 

It  is  necessary  to  study  this  matter  closely,  for  of  late  an 
opinion  has  grown  up  among  discouraged  bimetallists  that, 
even  if  the  free  coinage  of  silver  should  result  in  a  fall  to  a 
silver  standard,  it  would  only  lead  to  greater  prosperity  in  such 
a  producing  country  as  the  United  States.  If  this  theory  were 
sound  we  should  hardly  expect  to  find  silver  nations  seeking  to 
adopt,  the  gold  standard.  The  theory  seems  in  a  degree  plausi- 
ble, and  therein  lies  its  danger.  Mexico  may  be  taken  as  a 
country  which  has  undoubtedly  enjoyed  a  fair  degree  of  pros- 
perity of  late  years  under  a  silver  standard.  It  has  been  the 
great  silver  producer  of  the  world,  and  so  long  as  silver  and 
gold  maintained  a  tolerably  stable  relation,  silver  was  the  main 
article  of  export ;  even  her  own  currency  became  contracted,  so 
much  silver  was  required  to  pay  for  imports.  But  as  silver  de- 
preciated the  production  and  export  of  other  merchandisa  was 
stimulated,  for  the  expense  of  producing,  which  was  paid  in 
silver,  enabled  producers  to  sell  in  gold  countries  at  very  lucra- 
tive prices  when  converted  into  silver  at  high  rates  of  exchange. 
How  this  condition  of  things  has  developed  the  export  of  Mexi- 
can agricultural  products  is  revealed  by  the  fact  that  the  total 
exports  for  several  years  up  to  18G9  were  about  $20,000,000; 
in  the  year  1872-73  they  amounted  to  $31,594,000;  in  1888- 
89  they  swelled  to  $60,158,000;  in  1891-92  to  $75,467,000, 
and  in  1892-93  to  $87,509,000. 

The  fall  in  silver  has  also  stimulated  Mexican  manufact- 
ures, because  foreign  manufactures  have  to  be  paid  for  in 
gold,  and  the  rate  of  exchange  is  so  high  that  it  pays  to  manu- 
facture at  home.  Some  American  manufacturing  plants  have 
actually  been  taken  to  Mexico.  It  is  also  claimed  that,  as  every 
gold  dollar  is  converted  into  two  silver  dollars  when  sent  into 
Mexico,  the  investment  of  foreign  capital  in  the  country  is  en- 
couraged, for  when  invested  in  producing  commodities  to  be 
29 


450  THE  PRESENT  AND  THE  FUTURE 

sold  in  gold  countries,  like  coffee,  for  instance,  the  profits  to 
investors  is  large. 

If  this  were  accepted  as  the  whole  story  we  might  at  once 
assume  that  a  depreciating  standard  is  a  good  thing,  but  Mexi- 
can financiers  are  beginning  to  realize  that  while  the  country 
has  been  enjoying  a  period  of  good  government  and  prosper- 
ous production  and  trade,  such  a  condition  cannot  last  indef- 
initely. 

The  reduction  of  imports  because  foreign  products  almost 
duplicate  their  price  when  sold  in  silver,  and  because  the  con- 
stant fluctuation  in  exchange  makes  it  uncertain  what  the 
value  of  commodities  will  be  when  the  time  for  payment  ar- 
rives, diminishes  in  proportion  the  revenue  of  the  government 
which  until  recently  was  mainly  derived  from  import  duties. 
At  the  same  time,  national  expenses  have  greatly  increased, 
and  part  of  the  increase  is  due  to  increased  payment  in  gold  of 
interest  on  the  national  debt  and  such  expenses  of  minor  ac- 
count as  the  salaries  of  consular  and  diplomatic  officers.  Im- 
port duties  are  already  so  high  that  they  do  not  admit  of  fur- 
ther increase,  and  it  has  been  found  necessary  to  greatly  in- 
crease the  burden  of  direct  taxation.  Still,  expenditures  will 
often  exceed  revenue.  Even  if  the  people  are  prosperous,  the 
government  finds  that  it  has  nearly  reached  the  point  beyond 
which  more  taxation  would  at  least  be  unpleasant. 

Railroads  are  also  badly  affected,  for,  while  collecting  their 
fares  and  freights  in  silver,  they  must  pay  in  gold  the  interest 
on  their  securities,  and  for  such  foreign  articles  as  they  need 
in  their  equipment.  The  result  is  a  further  burden  on  the 
production  of  the  country. 

M.  Romero,  the  Mexican  Minister  to  this  country,  in  an 
article  in  the  North  American  Review  in  1895,  was  inclined 
to  take  the  view  that  the  advantages  derived  from  the  use  of 
silver  money  fully  compensated  for,  if  they  did  not  overcome, 
the  disadvantages.  "Notwithstanding  all  this,"  he  added, 


THE  PLIGHT  OF  INDIA  451 

"  we  would  like  to  see  silver  commanding  the  same  price  as 
before  it  was  demonetized  in  1873,  and  we  think  the  world 
has  to  come  back  sooner  or  later  to  bimetallism  as  the  only  way 
to  have  a  more  stable  level  of  values  and  to  avoid  most  of  the 
financial, troubles  which  the  commercial  nations  of  the  world 
are  now  so  keenly  suffering."  The  inference  is  not  obscure. 
If  the  advantages  of  a  depreciating  currency  were  so  marked, 
why  should  silver  countries  wish  to  throw  them  away  for  the 
sake  of  seeing  silver  commanding  its  former  price?  Govern- 
ments are  not  controlled  by  sentiment.  They  realize  the  fatal 
consequences  of  that  prosperity  which  compels  them  to  exact 
from  the  producing  masses  all  that  stimulated  industry  gives 
them.  For  a  time  a  people  may  complacently  pay  over  to  the 
government  money  which  seems  to  come  easier  than  ever 
before,  but  the  governments  know  that  there  must  come  a 
time  when  the  deficits  occasioned  by  the  requirements  of  the 
creditor's  appreciated  currency  cannot  be  so  remedied  with  im- 
punity. The  practice  leads  to  repudiation  or  revolution. 

We  need  seek  no  better  reason  why  Austria-Hungary,  at 
great  expense  and  labor,  sought  the  gold  standard  when,  ten 
years  before,  it  could  have  resumed  specie  payments  on  a  silver 
basis,  the  depreciation  in  silver  having  brought  it  to  a  par 
with  the  paper.  It  shows  why  Japan,  after  a  prosperous  season 
on  a  depreciating  standard,  availed  herself  of  the  earliest  oppor- 
tunity to  adopt  the  gold  standard,  and  Mexico  would  not  hesi- 
tate if  she  could  secure  the  gold.  As  yet.  it  is  impossible,  for 
her  exports  are  not  yet  sufficiently  large  to  enable  her  to  buy 
gold.  Her  time  will  come  unless  the  present  tendencies  are 
checked. 

No  silver  country  is  in  such  a  plight  as  India,  and  her 
plight  is  England's  concern.  In  studying  her  situation  as 
compared  with  that  of  such  countries  as  Mexico,  due  attention 
must  be  given  to  differences  in  political  conditions,  while  bear- 
ing in  mind  also  the  distinction,  already  alluded  to,  between  the 


452  THE  PRESENT  AND  THE  FUTURE 

government  which  makes  the  budget  and  the  producing  people 
who  handle  the  currency.  Mexico  is  a  country  of  recently 
marked  development  under  an  independent  government  of  the 
republican  type.  India,  comprising  nearly  a  fifth  of  the 
human  race,  is  subject  to  a  government  of  those  whom  we  are 
pleased  to  call  enlightened  foreigners,  with  a  small  military 
force  at  hand.  Commercial  England  regards  it  as  her  business 
to  make  money  out  of  India.  Patriotic  Mexicans  regard  it  as 
their  business  to  make  a  peaceful  and  prosperous  nation  out 
of  the  Mexicans.  Since  the  days  of  unsuccessful  imperialism 
Mexico  has  developed  herself  under  natural  conditions  as  a 
republic.  India  has  been  developed  as  a  dependency  by  money- 
making  foreigners.  The  English  governors  in  India  have 
borrowed  of  English  capitalists  for  the  public  improvements, 
which  have  greatly  increased  the  material  power  of  the  Indian 
nation,  but  England's  motive  was  commercial,  not  patriotic. 
Here  were  nearly  three  hundred  millions  of  people  to  trade 
with,  to  buy  English  manufactures,  to  borrow  English  money, 
to  pay  interest  on  it,  and  to  pay  dividends  on  investments. 

Under  the  conditions  as  to  gold  and  silver  during  the  past 
twenty  years,  the  capitalist  has  demanded  his  interest  in  ap- 
preciating gold,  while  the  native  has  paid  his  taxes  in  depre- 
ciating silver.  The  added  compensation  which  a  people  pro- 
ducing on  a  depreciated  basis  has  found  in  selling  in  coun- 
tries on  an  appreciated  basis  has  had  the  double  effect  of  injur- 
ing the  producers  in  England  who  deemed  it  their  right 
to  sell  in  India,  and  of  enhancing  the  profits  of  the  English 
capitalist  and  money-changer.  Thus  we  can  discover  why  the 
English  producer  has  become  an  advocate  of  bimetallism  while 
the  banking  and  investing  portion  of  the  English  people  have 
clung  desperately  to  gold  monometallism.  Even  Christians 
are  seldom  unselfish. 

For  twenty  years  the  fruition  of  Indian  development  has 
passed  into  the  hands  of  the  English  capitalist,  who  has  in- 


TAXING  INDIA  IN  SILVER  TO  PAY  DEBTS  IN  GOLD  453 

vested  in  India,  and  who  has  exacted  his  pound  of  flesh  whether 
harvests  were  good  or  bad,  in  famine  or  in  plenty.  Little  by 
little,  as  silver  has  declined  in  value  in  England,  though  not 
in  India,  the  English  governors,  acting  as  the  instruments  for 
the  payment  of  the  debt  to  England,  have  found  themselves 
settling  into  a  difficulty.  To  make  up  for  the  depreciation  of 
the  legal  tender  of  India  in  terms  of  the  legal  tender  of  Eng- 
land, they  have  imposed  new  taxes  on  the  people  of  India. 
For  a  long  time  the  imposition  of  import  duties,  so  obnoxious 
to  the  English  producer,  who  wished  no  restrictions  upon  his 
power  to  sell,  was  resisted,  but  recently  it  became  necessary. 
So  that  now  the  government  finds  itself  at  that  point  where, 
unless  exchange  is  kept  stable  and  all  improvements  of  the 
country  stop,  it  must  face  a  recurring  deficit  and  the  impossi- 
bility of  laying  more  taxes  without  stripping  the  natives  of 
the  little  wealth  they  have  accumulated.  The  process  has  not 
been  hindered  by  any  squeamishness  as  to  stripping  them  of 
the  wealth  they  have  recently  produced. 

In  1892,  Lord  Ilerschell's  commission,  after  reviewing  all 
the  suggestions  for  increased  taxation  as  a  means  to  counter- 
balance the  fall  in  exchange,  concluded  that  the  further  impo- 
sition of  direct  taxes  would  be  dangerous,  while  import  duties 
would  be  distasteful  to  English  traders.  That  source  of  relief 
was  discarded,  and  the  attempt  to  produce  a  monopoly  value 
in  the  legal-tender  currency  of  the  natives  adopted  instead,  as 
the  least  liable  to  excite  their  suspicions,  but  now  it  has  been 
found  necessary  to  impose  the  taxes  as  well  as  to  monopolize 
the  rupee. 

The  net  amount  obtained  from  the  imposition  of  the  salt, 
income,  and  custom  taxes  for  the  fiscal  years  1894-95  is  given 
as  follows: 

Salt  tax Rs.    81.670,000 

Income  tax Rs.     17.780.000 

Customs  tax,  Rs.     30,800,000 

Total,  .  .          .          Rs.  136,250,000 


454  THE  PRESENT  AND  THE  FUTURE 

The  average  loss  because  of  the  depreciation  of  silver  in  re- 
mitting the  home  charges,  that  is,  in  paying  the  English  cred- 
itor, has  been  about  130,000,000  rupees  annually.  In  other 
words,  but  for  the  depreciation  of  silver  these  three  forms  of 
taxation  might  almost  be  dispensed  with.1 

The  poverty  of  the  Indian  nation,  perhaps,  deserves  a  word 
in  view  of  what  silver  advocates  have  said  of  its  prosperity 
under  a  depreciating  silver  standard.  Some  impression  of  it 
may  be  gained  from  the  fact  that  an  income  tax  falling  as  low 
as  on  incomes  of  500  rupees,  and  at  the  average  rate  of  about 
5f  pence  per  pound,  yields  but  about  17,780,000  rupees  in  a 
population  of  nearly  300,000,000.  This  might  naturally  be 
expected  in  a  nation  where  the  circulation  per  capita  is  less  than 
six  rupees  in  the  coinage,  of  which  the  government  holds  a 
monopoly. 

1  Concerning  the  nature  of  these  taxes,  we  may  quote  from  a  re- 
cent article  in  the  North  American  Review,  by  Prof.  A.  S.  Ghosh,  of 
the  Calcutta  University.  He  says: 

"  In  India  salt  is  a  government  monopoly,  as  it  was  in  France 
before  the  Revolution.  The  effect  of  the  monopoly  is  to  raise  the 
price  to  the  consumer  some  2000  per  cent,  above  the  free  market 
price.  This  is  a  heavy  burden  on  the  poorer  classes,  whose  daily 
meal  invariably  consists  of  a  handful  of  rice,  or  some  other  grain, 
Havored  with  a  little  salt.  The  government  preserves  its  right  to 
this  monopoly  by  the  most  stringent  laws,  as  was  also  done  in  France 
before  the  Resolution.  The  writer  has  personally  met  with  a  few 
cases  where  some  famine-stricken  people  utilized  a  little  salt  scooped 
out  of  the  sand  on  the  seashore  after  the  tide  had  receded,  in  order 
to  cook  some  wild  vegetables  gathered  from  the  jungle.  For  this 
crime  a  fine  of  two  rupees  was  imposed  by  the  magistrate,  or  a  short 
term  of  imprisonment  as  an  alternative  —  the  latter  being  joyfully 
preferred  by  the  delinquents  as  being,  at  least,  a  guarantee  against 
starvation. 

"  Income  Tax.  —  This  is  a  tax  on  incomes  from  all  sources  at  the 
rate  of  4  pies  in  the  rupee  (?.  r.,  in  the  same  proportion  as  5d.  in  the 
pound)  on  incomes  between  500  rupees  and  2000  rupees  per  annum, 
and  at  5  pies  in  the  rupee  (/.  e.,  as  (>y±(1.  in  the  pound)  on  incomes  of 
2000  rupees  and  above.  This  tax  is  understood  to  be  only  a  tempo- 
rary measure,  rendered  necessary  at  present  by  the  critical  financial 
condition  of  the  government.  It  presses  very  heavily  on  the  lower 
middle  classes  because  of  its  low  incidence. 

"  Customs.  —  This  is  a  duty  on  all  imported  goods  at  an  average 
rate  of  5  per  cent,  of  their  value  —  except  certain  commodities  which 
come  under  sumptuary  laws,  and  which  are  reckoned  at  a  higher 
rate." 


RESULTS  OP  THE  RUPEE  VACUUM  455 

England's  government  of  India  has  now  simply  settled 
down  to  the  question  of  taxing  this  poverty-stricken  popula- 
tion to  the  utmost  to  pay  English  creditors.  Public  improve- 
ments are  out  of  the  question.  If  any  borrowing  is  done  it 
must  be  to  pay  the  interest  on  debts  already  incurred.  That 
has  been  frequently  resorted  to  even  in  times  of  Indian  pros- 
perity, and,  of  course,  the  burden  has  been  thereby  increased, 
while  the  magnitude  of  the  ultimate  collapse  of  such  a  policy 
is  ever  growing.  The  stability  of  exchange  depends  upon  the 
degree  of  the  blight  on  the  currency.  There  is  a  limit  beyond 
which  even  the  most  abject  humanity  will  not  go.  Such  peo- 
ple are  sometimes  the  most  dangerous  when  once  aroused. 

It  has  been  recently  assumed  that  the  effort  to  raise  ex- 
change by  creating  a  rupee  vacuum  has  succeeded  at  last,  but 
apparently  the  government  does  not  care,  or  dare,  to  sell  bills 
at  the  fixed  rate.  Even  though  the  currency  has  been  disas- 
trously contracted,  the  sale  of  bills  at  Is.  4(7.  would  naturally 
result  in  further  imports  of  silver,  considering  its  low  price, 
and  such  imports  of  silver  though  demanded  for  the  good  of 
the  people,  would  not  simply  endanger  the  vacuum  and  the 
stability  of  exchange,  but  prevent  the  sale  of  council  bills. 
They  must  be  sold  at  a  low  rate  in  spite  of  the  contraction.1 

i  "  Now  that  the  mischief  of  closing  the  Indian  mints  has  been 
done,  and  the  people  of  India  have  suffered,  some  irreparably,  and 
the  result  aimed  at  has  been  reached,  viz.,  the  shrinkage  in  the 
volume  of  the  Indian  currency,  it  passes  all  human  understanding 
to  know  why  the  authorities  still  take  less  than  the  full  legal  value 
of  the  rupee  (Is.  4d.)  in  the  sale  of  India  Council  bills.  During  the 
first  six  months  of  this  year  the  stringency  of  the  Indian  money 
market  was  so  great  that  banks  in  India  were  refusing  to  give  loans 
at  10  per  cent.,  even  on  government  securities,  and.  consequently,  the 
authorities  might  have  sold  India  Council  bills  to  English  bankers 
who  had  to  make  remittances  to  India  at  even  a  small  premium 
above  the  legal  rate  of  1s.  4d.  per  rupee.  But  during  all  that  time 
these  bills  were  offered  at  an  average  rate  of  1ft.  2y2d.  per  rupee, 
thereby  conferring  a  clear  profit  of  over  10  per  cent,  on  EngMsh 
bankers  as  a  free  gift,  at  the  cost  of  the  famine-stricken  people  of 
India."  —  Prof.  A.  S.  Ghosh,  Calcutta  University,  North  American 
Review,  October,  1897. 


456  THE  PRESENT  AND  THE  FUTURE 

Another  famine  lias  been  decreed  in  this  land  of  poverty- 
stricken  millions,  a  part  of  the  English  empire.  Heretofore 
during  such  seasons  the  natives  could  draw  upon  their  little 
hoards  for  the  bare  necessities  of  life,  or  could  take  their  silver 
ornaments  to  the  mint  and  have  them  coined  into  the  legal 
tender  of  the  land.  Every  bangle  of  the  Indian  women  had  a 
value  in  time  of  distress.  But  now  the  mints  are  closed,  and 
the  native  finds  that  his  treasure  has  lost  much  of  its  value. 
To  steady  exchange,  to  aid  the  foreign  government  in  satisfy- 
ing the  foreign  creditor  so  as  not  to  further  tax  a  people  al- 
ready stripped  of  all  they  produced,  enlightened  England  has 
put  her  foot  on  the  currency  of  a  people  in  her  keeping,  of  a 
people  whose  empress  is  England's  queen.  This  is  the  fact, 
which,  under  the  stress  of  famine,  the  Indian  people  are  be- 
ginning to  realize  for  the  first  time.  The  immediate  future  of 
India  will  be  worth  watching.  Events  never  fail  in  their  logic. 

Here  is  England's  interest  in  silver.  Xo  other  nation  on 
the  face  of  the  earth  is  so  vitally  concerned,  no  other  govern- 
ment is  so  seriously  affected  by  the  decline  in  the  value  of 
silver.  This  is  one  of  the  reasons  why  bimetallism  thrives  in 
England,  notwithstanding  the  resistance  of  those  who  profit 
from  the  loans.  Meanwhile,  according  to  recent  advices,  the 
Lancashire  industries  are  sinking  lower  and  lower,  a  reduc- 
tion in  wages  is  demanded,  and  bimetallism  is  more  and  more 
becoming  a  test  in  parliamentary  elections.  Katurally,  the 
government  has  stood  ready  to  make  concessions  to  secure  open 
mints  to  silver  in  France  and  the  United  States.  That  would 
help  the  Indian  government  and  home  production  and  leave 
conservative  finance  satisfied. 

But  in  the  interest  of  international  bimetallism  this  is  what 
the  United  States  should  say  to  England :  "  We  appreciate 
your  delicate  and  exceptional  situation.  We  have  often  asked 
you  to  enter  with  us  into  a  bimetallic  agreement;  your  own 
great  colony  of  India  has  pleaded  with  you  to  do  so;  your 


OUR  PROPER  POSITION  TOWARDS  ENGLAND  457 

once  thriving  manufacturers  have  interceded  also.  You  have 
always  declined  lest  it  should  imply  a  dissatisfaction  with  your 
standard  of  value.  For  years  you  have  been  willing,  anxious, 
eager,  that  we  should  open  our  mints  to  silver.  Your  monome- 
tallic statesmen  have  surpassed  our  own  silver  advocates  in 
predicting  that  we  could  ourselves  alone  establish  a  stable  ratio 
between  the  metals.  In  your  anxiety  you  have  admitted  nearly 
every  claim  that  bimetallism  has  made,  but  have  still  declined 
to  enter  into  a  practical  agreement  with  us.  Germany  has 
stood  ready,  if  you  would  but  lead  the  way,  or,  if  not  leading, 
would  simply  assent.  Xow,  we  have  decided  to  wait  till  you 
are  ready.  France  has  already  acquired  a  large  stock  of  gold 
and  can  acquire  it  more  easily  than  you.  The  United  States 
will  now  proceed  to  acquire  the  precious  metal.  You  are  aware 
of  our  opportunities  in  that  line  if  they  are  improved.  We 
are  the  largest  producers,  and  the  gold  from  your  jSTorth 
American  possessions  is  coming  to  our  mints.  "With  the  feel- 
ings of  enlightened  humanity  we  deplore  the  distress  in 
famine-stricken  India,  and  we  have  been  raising  a  considerable 
sum  for  the  relief  of  your  subjects.  The  failure  of  crops  in 
Europe  we  cannot  but  regard  as  a  human  calamity,  but  if 
Providence  is  kind  to  Xorth  America,  uniformly  gives  us  a 
good  climate,  and  frequently  is  unkind  to  Europe  and  Asia, 
it  is  our  fortune,  not  our  fault.  "We  can  help  you,  for  we  have 
a  large  crop  of  cereals,  and,  of  course,  you  will  require  a  large 
quantity.  The  price  of  wheat  will  be  about  a  dollar  a  bushel 
—  other  cereals  accordingly  —  and  we  shall  expect  you  to  pay 
in  gold,  which  must  remain  our  standard  of  value  till  you  are 
ready  to  co-operate  with  us  to  secure  something  better.  "We 
expect  that  the  market  will  maintain  this  price  for  wheat  at 
least  three  years,  for  one  short  crop  in  Europe  and  India  means 
that  it  will  require  three  years  to  again  produce  a  comfortable 
available  surplus.  "We  have  recently  increased  our  tariff  in 
the  hopes  of  a  larger  revenue,  which,  we  expect,  will  aid  us  in 


458  THE  PRESENT  AND  THE  FUTURE 

keeping  what  gold  we  secure  and  produce.  We  have  stopped 
silver  purchases,  and  the  increasing  business  of  our  people  will 
doubtless  require  the  added  gold  in  our  currency.  We  notice 
that  some  is  actually  coming  to  us  from  Australia  to  settle 
balances,  though  this  has  usually  gone  to  London.  You  re- 
member the  years  1880  to  1883,  when  European  crops  were 
short,  when  the  rate  of  the  Bank  of  England  was  kept  incon- 
veniently high,  when  your  mint  in  the  course  of  a  whole  year 
coined  only  as  much  gold  as  ours  averaged  every  working 
day,  while  a  surplus  of  bullion  remained  beyond  their  capacity. 
We  should  have  kept  that  gold  had  we  not  by  currency  laws, 
which  hurt  us  less  than  they  helped  you,  made  it  easier  for 
you  to  secure  the  gold  you  required  here  than  elsewhere. 
We  are  not  coining  silver  now,  and  we  do  not  intend  to  till 
there  is  an  international  agreement,  for  bimetallism  under 
which  your  mint  stands  open  to  it  and  the  Bank  of  England 
treats  it  as  has  the  Bank  of  France.  Our  people  by  a 
large  majority  prefer  bimetallism  to  a  gold  standard,  not  be- 
cause we  produce  silver,  for  the  value  of  our  silver  product  is 
less  than  that  of  our  gold  product,  and  is  insignificant  beside 
the  value  of  our  farm  products;  but  they  have  concluded  to 
cease  pleading  for  bimetallism  and  voting  for  free  silver,  and, 
while  we  should  much  prefer  to  treat  with  you  at  once  for  puro 
international  bimetallism,  we  consider  it  best  to  assume  for 
the  present  "  an  attitude  of  expectancy."  To  be  sure,  there  is 
a  great  increase  in  the  production  of  the  yellow  metal,  but  we 
hope  to  be  able  to  take  care  of  what  is  produced  on  this  side, 
including  your  Northwest  Territory,  and  the  total  increase  is 
as  yet,  perhaps,  no  more  marked  than  the  increase  in  the  num- 
ber of  nations  stretching  out  their  hands  for  it.  If  you  prefer 
to  send  back  some  of  our  securities  in  exchange  for  cereals  and 
cotton,  and  can  induce  your  capitalists  to  part  with  them  for 
such  securities  as  India  or  your  other  colonies  afford,  we  will 
willingly  take  them,  for  they  will  reduce  just  so  much  our  nee- 


THE  WOLCOTT  COMMISSION  459 

essary  annual  remittance  in  interest,  and  tend  in  the  end  to 
your  larger  remittances  to  us  of  gold.  We  say  this  in  all 
kindness,  and  would  much  prefer  not  to  say  it  at  all  or  to  seem 
to  enter  upon  a  commercial  contest  of  this  character,  but  our 
interests  as  a  nation  and  as  friends  of  bimetallism,  we  think, 
require  it." 

If  we  are  a  nation  of  believers  in  the  virtue  of  genuine 
bimetallism,  this,  as  I  read  history  and  the  present  conditions, 
would  be  the  thing  to  say  to  England.  There  appears  no  more 
reason  for  the  belief  that  Europe  would  follow  us  if  we  opened 
our  mints  to  silver  than  there  did  ten  or  twenty  years  ago.  If 
there  were  any  chance  of  the  passage  of  a  free-silver  bill  in 
Congress  to-day,  neither  England  nor  the  Continental  nations 
would  move  a  step. 

While  this  view  has  long  been  held  by  the  wisest  bimetal- 
lists  here  and  abroad,  recently  a  class  have  come  to  regard  it 
as  old-fashioned.  At  the  last  annual  meeting  of  the  English 
Bimetallic  League  at  Manchester,  in  June,  1897,  it  was  ap- 
parent that  the  United  States  were  expected  to  take  the  ini- 
tiative. Lord  Aldenham  (Henry  Hucks  Gibbs),  while  con- 
sidering the  feeling  expressed  by  the  unanimous  vote  in  the 
Commons,  and  the  promise  of  the  Chancellor  of  the  Exchequer 
to  render  all  the  assistance  possible  in  a  settlement  of  the  ques- 
tion, as  marked  signs  of  progress,  added  that  the  object  of  bi- 
metallism would  be  gained  if  the  United  States  or  France,  or 
some  other  great  commercial  nation,  would  carry  the  matter 
through  without  England,  and  he  thought  the  United  States 
meant  to  do  it  if  possible.  That  was  his  interpretation  of  the 
Wolcott  Commission,  which  was  appointed  by  President 
McKinley  in  April,  agreeably  to  the  demands  of  the  Republi- 
can platform.  This  commission,  consisting  of  Senator  Wol- 
cott, of  Colorado,  ex-Vice-President  Stevenson,  of  Illinois,  and 
General  Paine,  of  Massachusetts,  during  the  summer  of  1897, 
carried  on  negotiations  with  the  governments  at  London,  Ber- 


460  THE  PRESENT  AND  THE  FUTURE 

lin,  and  Paris  for  the  basis  of  another  conference  looking  to  a 
convention  or  agreement  for  the  restoration  of  silver.  Those 
who  ridiculed  the  mission  of  these  gentlemen  underestimated 
the  strength  of  bimetallism  in  Europe  —  or,  at  least,  of  the 
desire  to  have  something  done  for  silver  —  as  much  as  the 
European  bimetallists  as  well  as  monometallists  overestimated 
the  anxiety  in  this  country  to  do  something  for  silver.  Not- 
withstanding our  appearance  at  our  old  pastime  of  importun- 
ing Europe,  Europe  was  waiting  anxiously  to  be  importuned, 
and  was  considerably  less  secure  in  her  attitude  of  expectancy 
than  heretofore. 

The  English  Chancellor  of  the  Exchequer  had  pledged 
himself  to  Parliament  to  do  all  in  his  power  to  bring  about 
an  agreement  guaranteeing  a  stable  power  of  exchange.  The 
Commons  made  this  practically  a  demand  upon  the  govern- 
ment by  unanimous  vote.  The  Royal  Commission  appointed 
in"  189 3  to  inquire  again  into  the  depression  of  agriculture 
issued  during  the  summer  a  final  report  dealing  solely  with 
the  evidence  submitted  for  and  against  a  change  in  the  Eng- 
lish monetary  system  as  a  remedy  for  depression.  It  was 
signed  by  ten  of  the  fourteen  commissioners,  and  among  its 
conclusions  was  this : 

"  That  if  an  international  arrangement  were  made  for  the  open- 
ing to  silver  of  the  mints  abroad  and  in  India,  and  its  restoration  — 
either  wholly  or  partially  —  to  the  position  it  filled  prior  to  1873, 
it  would  be  of  the  greatest  benefit  to  the  agricultural  industry,  and 
that  the  English  government  should  heartily  co-operate  with  foreign 
powers  in  promoting  a  conference  to  bring  about  this  result,  and 
thereby  give  effect  to  the  unanimous  resolution  in  the  House  of  Com- 
mons passed  in  February,  1895." 

The  Erench  government,  now  composed  of  some  strong 
members  of  the  Bimetallic  League,  was  quite  ready  to  promise 
a  full  co-operation  with  the  United  States  at  the  ratio  of  15-J 
to  1.  On  this  point,  of  course,  the  American  commissioners 
could  give  no  definite  assurances.  The  supreme  foolishness  of 
the  adoption  of  the  ratio  of  16  to  1  in  1878  ought  to  be  plain 


THE  COMMISSION'S  PROPOSITION  TO  ENGLAND  461 

now  to  even  the  silver  men  who  were  so  largely  responsible 
for  it. 

The  propositions  made  to  the  English  government  were  in 
the  main  as  follows:  The  opening  of  the  Indian  mints  to  the 
free  coinage  of  silver;  the  repeal  of  the  order  making  the  sover- 
eign a  legal  tender  in  India;  the  placing  of  one-fifth  of  the 
bullion  in  the  Issue  Department  of  the  Bank  of  England  in 
silver;  the  raising  of  the  silver  legal  tender  from  £5  to  £10; 
the  issue  of  £1  notes  based  upon  silver;  the  retirement  of  the 
half-sovereign  of  gold  and  the  substitution  of  paper  therefor 
based  upon  silver;  an  agreement  to  coin  annually  a  sum  — 
not  named  —  in  silver  or  the  purchase  of  a  sum  —  not  named 
—  in  silver  annually;  the  opening  of  the  English  mints  to  the 
coinage  of  rupees  and  the  British  dollar,  which  shall  be  a 
legal  tender  in  the  Straits  Settlements  and  other  silver  colonies, 
and  in  Great  Britain  up  to  the  limit  of  the  silver  and  legal- 
tender  action  by  the  colonies,  and  the  coinage  of  silver  in 
Egypt,  and  finally  an  agreement  upon  something  having  the 
general  scope  of  the  Huskisson  plan. 

Conferences  were  held  at  the  Foreign  Office  on  July  12 
and  15  to  discuss  the  proposals  with  the  American  envoys,  the 
French  Ambassador  participating  in  the  discussion.  France 
announced  her  willingness  to  open  her  mints  to  unlimited  free 
coinage  of  silver  at  a  ratio  of  15^  to  1  if  Great  Britain  would 
co-operate  with  her,  as  in  the  plan  stated.  Senator  AVolcott 
announced  that  the  United  States  government  was  inclined 
to  accept  this  ratio,  upon  which  France  insisted. 

Baron  de  Courcel,  the  French  Ambassador,  suggested  £10,- 
000,000  as  the  sum  of  the  British  annual  purchase  of  silver  to 
fill  the  blank  in  the  proposals,  and  Senator  AVolcott  approved 
the  suggestion.  Sir  Michael  Hicks-Beach  announced  that  the 
heads  of  the  government  of  Great  Britain  were  unanimous 
in  their  refusal  to  open  the  English  mints  to  the  free  coinage  of 
silver,  but  were  disposed  to  co-operate  in  other  ways. 


462  THE  PRESENT  AND  THE  FUTURE 

This  was  very  apparent.  The  English  government,  while 
disposed  to  go  no  further  than  necessary,  was  prepared  to  go 
further  than  ever  before.  The  promptness  with  which  the 
Bank  of  England  signified  its  willingness  to  keep  a  fifth  of  its 
reserves  in  silver  came  as  a  surprise  to  many  who  had  evi- 
dently forgotten  that  the  bank  had  stood  ready  to  do  this  for 
fifteen  years  in  order  to  induce  France  and  the  United  States 
to  open  their  mints  to  silver. 

The  question  of  the  reopening  of  the  Indian  mints  was  re- 
ferred to  the  Indian  government,  wThich,  on  September  16, 
returned  a  long  and  elaborate  argument  culminating  in  a 
unanimous  recommendation  to  refuse  to  entertain  the  sug- 
gestion. This  was,  perhaps,  as  much  a  surprise  to  the  bimetal- 
lists  of  England,  as  was  the  willingness  of  the  bank  to  hold 
silver  in  its  reserves  to  the  monometallists.  But  a  government 
in  India's  desperate  condition,  with  a  frontier  war  and  a  famine 
on  hand,  might  be  expected  to  hold  to  the  expedients  in  prac- 
tice, no  matter  how  unsatisfactory,  unless  abundant  grounds 
for  improvement  in  other  directions  were  absolutely  insured. 
Its  advisers  expressed  this  fear  in  their  reply,  and  intimated  that 
an  assured  basis  for  stable  exchange  must  be  provided  before 
the  opening  of  the  mints  could  be  considered.  The  financial 
advisers  have  always  complained  more  of  the  instability  of  ex- 
change than  of  the  real  decline  in  silver,  and  now  that  a  higher 
degree  of  stability  has  been  acquired  by  contracting  the  cur- 
rency they  are  inclined  to  minimize  the  evils  which  may  come 
from  such  a  contraction,  though  the  remedy  they  persist  in 
may  prove  worse  than  the  disease. 

It  is  not  altogether  unlikely,  moreover,  that  the  action  of 
the  Indian  government  and  the  final  endorsement  by  the  home 
government  may  have  been  influenced  by  the  bimetallic  argu- 
ments already  referred  to  concerning  the  desirability  and  the 
probability  of  American  initiative.  This  sentiment  is  re- 
flected in  this  country  by  such  bimetallists  as  President  An- 


RENEWED  ANXIETY  IN  EUROPE  463 

drews,  of  Brown  University,  who  recently  said  that  if  we  would 
reopen  our  mints  France  was  certain  to  follow. 

France  certainly  will  not  follow  unless  we  reopen  our  mints 
at  the  ratio  of  15.50  to  1.  She  insists  on  this  and  always  has. 
Bimetallism  can  never  result  from  our  "16  to  1  silverism." 

While  the  unfavorable  action  of  the  Indian  government 
destroyed  the  prospects  of  an  immediate  conference  with  the 
great  powers,  the  United  States  commissioners  did  not  re- 
nounce hope,  but  continued  their  efforts.  President  Mc- 
Kinley,  in  his  message  to  the  Fifty-fifth  Congress,  spoke  of  the 
gratifying  action  of  France  in  joining  this  country  in  an  at- 
tempt to  bring  about  an  agreement  for  a  fixed  ratio,  and  stated 
that  our  special  envoys  believe  that  the  question  may  yet  be 
solved  by  further  negotiations. 

In  seeking  bimetallism  the  question  for  us  is  not  how  far 
England  will  go  for  the  sake  of  inducing  the  United  States  to 
reopen  their  mints,  but  how  long  England  will  continue  in  its 
present  attitude  if  the  United  States  stop  begging  and  plead- 
ing and  voting  for  free  silver,  and  go  to  work  earnestly,  as 
Count  von  Mirbach  expressed  it,  to  secure  and  to  keep  gold. 

The  European  nations  do  not  fail  to  recognize  the  diffi- 
culties which  such  a  policy  in  the  United  States  would  impose 
upon  them.  This  is  the  reason  for  the  recent  movement  in 
Austria  for  a  commercial  union  against  this  country,  a  senti- 
ment which  was  also  reflected  in  a  recent  debate  in  the  Budget 
Committee  of  the  German  Reichstag,  when  Dr.  Hammacher 
urged  the  necessity  of  such  a  union  of  Continental  powers. 
The  situation  is  similar  to  that  of  1882,  when  the  "  Central 
European  Zollverein  "  was  proposed,  except  that  the  United 
States  are  now  more  advantageously  placed,  having  ceased  the 
coinage  of  silver.  The  anxiety  is  shown  in  the  recent  course 
of  the  Bank  of  England  in  restricting  its  loans  and  actually 
borrowing  from  the  open  market.  English  bills  have  even 
been  discounted  for  English  houses  in  Uew  York.  Such  ex- 


464  THE  PRESENT  AND  THE  FUTURE 

pedients  cannot  avail  for  any  length  of  time.  Europe  must 
take  our  cereals  or  reduce  the  efficiency  of  its  people  and  breed 
a  discontent  which  might  seriously  shake  the  thrones.  For 
Europe  to  undertake  to  depend  exclusively  on  the  grain  fields 
of  Austria-Hungary,  when  American  wheat  is  being  sold  on 
the  Vienna  market  for  Austria's  own  needs,  and  when  Indian 
producers  are  being  squeezed  by  a  monopolized  currency, 
\vould  be  suicidal.  Europe  would  have  a  violent  time  in  with- 
holding bread  from  the  people  in  order  to  hold  its  gold  and  ex- 
pedients to  postpone  the  settlement  for  our  grain,  such  as  seem 
to  be  practiced  by  the  Bank  of  England,  must  only  aggravate 
the  settlement  when  it  comes,  unless  the  United  States  should 
foolishly  throw  away  their  opportunity.  Europe  will  not 
cease  to  hope  for  such  foolishness  on  our  part,  but  when  she 
finds  that  we  mean  to  pursue  the  advantage  which  our  rich 
heritage  has  given  to  us,  there  will  be  a  monetary  conference 
very  different  from  any  we  have  seen.  We  shall  not  be  com- 
pelled to  wait  long  if  we  let  the  currency  alone  and  devote  our- 
selves strictly  to  business.  Herein  lies  the  possibility  of  inter- 
national bimetallism. 

Unfortunately,  those  in  this  country  who  have  had  a 
sincere  desire  for  the  rehabilitation  of  silver  have  been  its 
worst  enemies,  because  of  a  failure  to  appreciate  the  conditions 
abroad,  and  the  dangers  of  this  form  of  indiscretion  may  not 
be  entirely  over  yet.  It  is  noticeable  that  this  new  idea  of  ac- 
complishing bimetallism  through  the  initiative  of  the  United 
States  began  to  develop  among  the  silver  men  after  the  failure 
of  the  conference  of  1892.  Great  stress  has  been  laid  on  the 
apparent  prosperity  of  countries  on  a  silver  basis.  India, 
Japan,  and  Mexico  have  even  been  used  as  examples  of  what 
the  silver  standard  can  do.  It  has  been  claimed  that  on  a  sil- 
ver basis  we  could  secure  the  trade  of  Asia,  and  could  at  the 
same  time  compete  better  with  Asiatic  products  in  Europe. 
It  was  but  a  step  from  this  to  the  theory  that  if  we  opened 


FUTURE  PRODUCTION  OF  GOLD  4C5 

our  mints  England  would,  to  save  her  Indian  and  Chinese 
trade,  hasten  to  adopt  bimetallism.  Such  is  the  "  new  fash- 
ioned "  idea  of  the  way  to  do  it,  and  since  the  defeat  of  Bryan 
and  the  evidences  of  a  remarkable  increase  in  the  production  of 
gold  the  idea  has  extended  to  more  judicious  economists,  dis- 
appointed, if  not  discouraged,  at  the  long  delay  of  the  accom- 
plishment of  that  doctrine  in  which  they  have  such  an  en- 
thusiastic faith. 

To  some  the  recent  evidences  of  enormous  gold  produc- 
tion, the  recent  decline  of  silver  to  its  lowest  point,  and  the 
recent  rise  in  the  price  of  cereals  appear  as  severe  blows  to 
the  bimetallic  cause.  The  scarcity  of  gold  has  been  one  of  the 
strongest  of  arguments  for  the  double  standard,  and  the  theory 
that,  as  wheat  and  cotton  have  followed  silver  in  the  down- 
ward course,  silver  was  really  the  more  constant  measure  of 
their  value  has  been  extensively  held.  But  wheat  has  risen 
to  a  dollar  and  silver  has  dropped  to  26(7.  In  reality  this  is  a 
blessing  to  the  cause  of  bimetallism.  It  will  tend  to  protect 
it  from  some  of  its  alleged  friends,  to  deprive  our  "  silverism  " 
of  much  of  its  strength,  to  prevent  demagogues  playing  so  suc- 
cessfully on  the  passions  of  the  distressed  farmer,  and  to  make 
the  free-silver  propaganda  less  rampant  in  Congress. 

Still,  it  is  clear  that  the  remarkable  increase  in  the  pro- 
duction of  gold  introduces  a  new  element  into  the  discussion. 
The  annual  production  of  the  yellow  metal  is  now  greater  than 
the  value  of  gold  and  silver  combined  in  the  days  of  the  Cali- 
fornia and  Australian  yield,  when  economists  talked  of  de- 
monetizing it;  and,  for  1897,  it  is  estimated  that  the  value  of 
the  product  will  exceed  that  of  gold  and  silver  combined  for 
any  year  in  history  up  to  1888.  The  possibilities  of  the  Yukon 
are  yet  unknown.  Gold  is  now  being  sifted  out  of  the  rich 
gravel,  and  the  scientific  theory  is  that  these  nuggets  are  but 
the  wearing  away  from  some  mother  lode,  working  in  the 

30 


466  THE  PRESENT  AND  THE  FUTURE 

course  of  ages  into  the  valleys  of  the  tributaries  of  the  upper 
Yukon.  An  old  California  miner  who  has  been  three  years 
in  the  region  of  the  Yukon  and  spent  1896  on  the  Klondike 
says:  "  My  advice  to  men  who  know  about  quartz  mining,  and 
have  had  experience  as  prospectors  so  that  they  know  pay  rock 
when  they  see  it,  is  to  hunt  for  the  mother  lode  that  has  fed  the 
placers  of  the  Klondike  region.  The  man  who  finds  that  and 
locates  a  claim  will  surely  have  almost  solid  masses  of  pure 
gold.  King  Solomon's  mines  of  fiction  won't  compare  with 
that  lode.  Why,  if  that  lode  is  found  and  can  be  worked  it  will 
demonetize  gold,  as  sure  as  gospel." 

But  there  are  noticeable  uncertainties  here.  The  lode  may 
not  be  found.  Geology  tells  us  that  at  some  time  a  milder 
climate  prevailed  north  of  the  Arctic  circle,  and  that  the  frozen 
north  is  a  later  chapter  in  the  biography  of  the  earth.  The 
lode  may  be  hidden  under  the  eternal  snows  of  the  highlands 
of  that  region,  to  remain  inaccessible  till  ages  hence  the  warm 
breath  of  the  tropics  again  eats  its  way  towards  the  pole.  The 
world's  new  production  has  been  coming  from  the  lands  be- 
yond the  frontiers  of  civilization,  and  is  now  pushed  to  regions 
under  the  midnight  sun. 

But  even  if  the  production  of  gold  rises  to  the  value  of 
$300,000,000  a  year  by  the  end  of  the  century,  as  some  are 
predicting,  there  is  little  probability  that  the  question  of  de- 
monetization would  suggest  itself.  The  present  situation  is 
very  different  from  that  of  the  fifties,  when  Chevalier  sounded 
his  warning;  then  but  two  governments  on  the  face  of  the 
earth  maintained  an  exclusive  gold  standard. 

I^ow,  for  every  increase  of  gold  produced  hands  are 
stretched.  Governments  are  waiting,  and  so  far  the  increase 
has  not  affected  general  prices,  but  the  continued  relaxation 
in  the  demand  for  silver  drives  its  price  lower  and  lower  in 
the  market.  He  is  not  a  dreamer  who  asks  what  would  hap- 
pen if,  after  all  the  nations  have  succeeded  in  climbing  to  a 


POSSIBILITIES  OP  A  HEALTHY  EXPANSION  467 

gold  standard,  the  production  of  the  metal  should  suddenly 
decline.  It  is  a  practical  question,  for  gold  once  secured  does 
not  endure  forever.  The  total  stock  of  gold  in  the  world  is  es- 
timated at  no  more  than  the  total  production  of  this  century. 
What  has  become  of  the  treasure  of  fifty  centuries  before? 
"What  has  become  of  that  mighty  treasure  poured  into  Europe 
after  the  discovery  of  America,  the  elixir  of  the  renaissance  of 
the  sixteenth  century? 

Providence  works  slowly  and  mysteriously,  and,  after  all, 
monetary  laws  and  conferences  are  but  manifestations  of  the 
erring  and  finite.  It  may  lift  us  all  to  the  plane  of  the  gold 
standard,  only  to  close  the  doors  to  new  supplies  of  the  metal. 
Yet  it  will  not  fail  humanity  if  there  is  a  destiny  marked  out 
for  it.  Wonderfully  have  we  extended  the  limits  of  our  finite 
vision;  still  it  is  a  narrow  window.  Stranger  things  have  hap- 
pened than  the  realization  of  the  dreams  of  the  old  alchemists. 
Even  now  one  of  our  scientists  and  a  man  of  some  reputation 
claims  that  he  is  making  gold  from  silver,  and  that  the  assay 
offices  are  taking  his  product.  The  long  debate  over  bimetal- 
lism may  be  only  the  talk  in  the  anteroom,  and  science  may 
throw  open  the  door  when,  at  last,  after  storming  in  vain,  we 
sit  ourselves  down  determined  to  make  the  best  of  our  oppor- 
tunities. 

History  reveals  no  reason  why  economists  should  stand  ap- 
palled at  the  possibility  of  a  doubling  of  the  standard  of  value, 
whether  brought  about  by  science  in  resolving  the  two  metals 
into  one,  or  by  England  eventually  accepting  bimetallism  for 
the  sake  of  her  commerce  and  India,  or  by  the  product  of  gold 
fields  under  the  midnight  sun.  It  is  easy  for  the  world  to  have 
too  much  paper  money,  but  difficult  for  it  to  obtain  too  much 
of  that  made  of  a  precious  metal,  a  metal  whose  every  ounce 
is  true  wealth. 

The  world's  supply  of  gold  and  silver  was  doubled  in  the 
sixteenth  century,  and  history  records  a  renaissance.  The 


468  THE  PRESENT  AND  THE  FUTURE 

product  of  gold  was  doubled  in  the  middle  of  the  present  cen- 
tury, and  history  reveals  something  like  another  renaissance. 

The  economic  changes  in  the  fifty  years  since  have  brought 
us  a  social  question.  The  capacity  of  the  masses  to  produce 
and  to  consume  has  not  gone  hand  in  hand  with  their  remarka- 
bly expanding  capacity  to  produce.  The  capacity  to  consume 
has  not  declined;  it  simply  has  not  kept  pace  in  the  develop- 
ment. 

Opinions  will  certainly  differ  as  to  the  cause.  Another 
generation  must  tell  the  world  who  of  us  is  right  and  who  is 
wrong.  The  desirability  of  a  healthy  expansion  of  business  on 
a  money  basis  of  true  intrinsic  value  will  not  be  denied,  and  if 
again  doubling  the  standard  of  value  would  do  this,  would 
widen  the  opportunities  of  the  millions  having  the  capacity 
but  not  the  means,  infuse  new  and  encouraging  elements  into 
the  social  body,  throw  down  certain  economic  barriers  which 
seem  to  restrain  the  innocent  and  the  ambitious,  and  awaken 
new  life  in  languishing  industries,  a  new  spirit  in  humanity, 
a  new  energy  in  a  degenerating  literature  and  art,  history 
might  one  day  call  it  another  renaissance. 


INDEX 


ACT,  of  Austria-Hungary,  of  1892,  estab- 
lishing gold  standard,  373. 

—  of  France,  of  18T6,  suspending  sil- 
ver coinage,  144. 

—  of  Germany,  of  1871,  instituting  gold 
coinage,  116 ;   of   1873,   establishing 
gold  standard,  126. 

—  of  Holland,  of  1873,  suspending  sil- 
ver coinage,  124;  of  1875,  instituting 
gold  coinage,  139. 

—  of  India,  of  1864,  making  the  sover- 
eign legal  tender,  31  ;   of  1893,  clos- 
ing mints  to  silver,  417. 

—  of  United  States,  of  1792,  creating 
national  coinage,  10  ;  of  1851,  debas- 
ing silver  pieces,  15;  of  1853,  making 
silver  coins  subsidiary,  16 ;  of  1869, 
for  strengthening  public  credit,  96 ; 
of  1873,  revising  the  mint  laws,  93, 
109-115,     117-123,    152-159,     208, 
210 ;  of   1878,  for  coinage  of  silver 
dollars,  178-192,   197-199,  250,  264, 
269,  325,  335,  340,  342,  345 ;  of  1890, 
for   silver    purchases,   364-368,    371, 
373,  387,  391,  424,  425,  427. 

Allard,  A.,  Belgian  delegate  in  confer- 
ence of  1892,  376,  377,  396,  400,  404. 

Allison,  Senator  W.  B.,  amends  the 
Bland  Bill,  180 ;  on  importance  of  a 
conference,  187-189;  delegate  in  con- 
ference of  1892,  377,  380,  397,  402, 
406. 

Alvensleben,  Count,  German  delegate 
in  conference  of  1892,  377,  382. 

Andrews,  E.  B.,  on  effect  of  tariffs,  347 
n. ;  United  States'  delegate  in  confer- 
ences of  1892,  376;  on  American  in- 
itiative, 462. 

Atkinson,  Edward,  special  commission- 
er to  Europe,  346;  report  of,  348-350. 

Austria,  monetary  treaty  with  German 
states,  9;  in  conference  of  1867,  45, 
58,  64,  70,  75,  80 ;  provisional  treaty 
with  France,  88;  in  conference  of 
1878,  205,  230,  246 ;  closes  mints  to 


silver,  253;  in  conference  of  1881, 
270,  278,  290,  304,  309,  322;  adopts 
protective  policy,  333;  imports  of 

§old,  354,  425 ;  adopts  gold  standard, 
73,  445,  451. 

Avila,  Count  d',  Portuguese  delegate  in 
conference  of  1867,  49,  57,  73,  75. 

BAGEHOT,  Walter,  on  universal  money, 
87 ;  on  German  currency,  90. 

Balfour,  Arthur,  member  of  English 
Gold  and  Silver  Commission,  344 ; 
subscribes  to  bimetallism,  363;  Man- 
sion House  address  of,  419;  on  Indian 
currency,  437. 

Bank  of  Austria-Hungary,  gold  stock 
of,  445. 

—  of  England,  efforts  to  retain  gold, 
146,  192,  195,  359,   361,  369;  reserve 
in  1876  and  1877, 194;  reserve  in  Octo- 
ber, 1887,  251 ;  discount  rate  and  ap- 
peals for  help,  291 ;  willing  to  hold 
silver  in  reserve,  317;  helped  by  Bank 
of  France.  360 ;  reserve  in  1889,  361 ; 
condition  in  1891  and  1892,  375;  pres- 
ent condition,  445. 

—  of  France,  opposes  adoption  of  gold 
standard,  89;  condition  in  1874,  143; 
condition  in  1876  and  1877, 194;  silver 
in   reserve,  212,   334;  proportion  of 
gold  to  silver  in  reserve,  258,  259, 267; 
increase  of  gold  stock,  359,  435;  con- 
dition in  1891  and  1892,  375;  present 
condition,  445. 

—  of  Germany,  condition  in  1876  and 
1877,  194;  discount  rate,  195,  253,  261; 
silver  stock,  366 ;  increases  its  gold, 
389;  condition  in  1891  and  1892,  375. 

—  of  Belgium,  favors  gold  standard, 137, 
310;  condition  in  1876  and  1877,  194. 

—  of   the  Netherlands,  ceases  to  buy 
silver,  124;  condition  in  1876  and  1877, 
194;  favors  bimetallism,  310;  loss  of 
gold  in  1882,  326. 

Barbour,  Sir  David,  member  English 


470 


INDEX 


Gold  and  Silver  Commission,  344; 
plan  for  gold  standard  In  India,  371, 
386,  388 ;  on  silver  in  India,  421. 

Baring  crisis,  359,  367,  368. 

Earth,  Dr.  T.,  on  Mirbach  resolution  in 
Reichstag,  433. 

Beckwith,  'N.  M.,  United  States  Com- 
missioner to  Exposition  of  1867,  37 ; 
letter  to  Seward,  38. 

Belgium,  opposes  double  standard  for 
Latin  Union,  30,  138 ;  in  conference 
of  1867,  49,  61,  62,  64 ;  difficult  posi- 
tion in  1874,  137 ;  in  conference  of 
1878,  205,  215,  227,  245;  redemption  of 
its  silver  coins,  252,  335;  in  conference 
of  1881,  270,  284,  299 ;  in  conference 
of  1892,  376,  378,  396,  400,  404.  See 
Bank. 

Belmont,  August,  member  of  refunding 
bond  syndicate,  170 ;  his  request  of 
Sherman,  172;  letter  to  Sherman  on 
Bland  Bill,  178 ;  favors  international 
conference,  183. 

Benton,  T.  H.,  on  ratio  of  16  to  1,  15. 

Berthemy,  French  Minister  to  United 
States,  transmits  Latin  Union  treaty 
to  Seward,  38;  transmits  invitation  to 
conference,  45;  note  to  Seward,  92. 

Bills  of  exchange  invented,  4. 

Bimetallism,  international,  basis  for  be- 
lief in,  136;  early  agitation  in  Europe 
for,  140-142, 144, 146 ;  conference  on, 
suggested  in  Congress,  160 ;  effect  of 
.Bland- Allison  Act  on,  191,  198,  349 ; 
discussed  in  conference,  212-231, 

'  235-249,  279-286,  289,  291-305, 
400-403;  growth  of  German  senti- 
ment for,  264,  266,  340,  431;  with  only 
two  states,  306;  monometallists  ad- 
mit possibility  of,  304,  315,  324,  351 ; 
effect  of  Cleveland  tariff  message  on, 
350;  growth  of  sentiment  for,  in  Eng- 
land, 341,  351,  362,  413,  434,  437;  de- 
sired by  India,  372, 390,  417;  effect  of 
"silver  craze"  of  1895  on,  439;  effect 
of  election  of  1896  on,  442;  effect  of 
increased  gold  production  on,  463. 

.   See  Double  Standard. 

Birch,  J.  W.,  member  of  English  Gold 
and  Silver  Commission,  344,  351. 

Bishops,  coinage  by,  2,  6,  8. 

Bismarck,  declines  for  Prussia  to  join 
Latin  Union,  40, 89;  influence  on  Ger- 
man money  reform,  116 ;  reported  a 
bimetallist,  265;  on  policy  of  protec- 
tion, 328  n. 

Bland,  Congressman  R.  P.,  his  first  free- 
coinage  bill,  160;  member  of  Silver 
Commission,  162;  advocates  ratio  of 
16  to  1,  167;  free-coinage  bill  of  1877, 
178;  accepts  Allison  compromise, 
187. 

Bogy,  Senator  L.  V.,  remark  on  act  of 
1873,  157;  for  unlimited  silver  coin- 


age, 159;  member  of  Silver  Commis- 
sion, 162;  favors  ratio  of  loi  to  1, 
166. 

Bonds,  United  States,  movement  to  pay 
in  greenbacks,  96;  contract  for  re- 
funding, 170;  Sherman's  letter  on 
payment  in  gold,  176;  sale  of,  stopped 
by  Bland  Bill,  180;  returned  from 
Europe,  182 ;  Matthews's  resolution 
on,  184;  subscriptions  opened  for, 
185 ;  another  contract  for,  190 ;  Eng- 
land pays  for  cereals  with,  196 ;  high 
fiat  ding  of,  abroad,  224 ;  first  sale  of, 
under  Cleveland,  428 ;  result  of  the 
sales,  440. 

Boissevain,  Dutch  delegate  in  confer- 
ence of  1892,  378,  395,  400. 

Boutwell,  G.  S.,  Secretary  of  Treasury, 
supervises  revision  of  mint  laws,  109; 
member  of  Silver.  Commission,  162; 
minority  report  of,  164. 

Bowen,  Prof.  Francis,  member  of  Sil- 
ver Commission,  162 ;  dissenting  re- 
port of,  165. 

Broch,  O.  J.,  Norwegian  delegate  in 
conference  of  1867,  49,  65 ;  statistics 
by,  cited,  132 ;  in  conference  of  1878, 
206,  228;  in  conference  of  1881,  270, 
280. 

Burckhardt-Bischoff,  Swiss  delegate  to 
conference  of  1881,  270,  288. 

Bullionist,  The,  cited,  252. 

CANADA,  and  monetary  system  of 
United  States,  61,  314;  in  conference 
of  1892,  271,  314. 

Casasus,  Mexican  delegate  in  confer- 
ence of  1892,  378,  389,  397. 

Cernuschi,  Enrico,  early  advocate  of 
bimetallism,  97,  140,  144 ;  testimony 
before  Silver  Commission,  166: 
French  delegate  in  conference  of 
1881,  271,  273,  278,  285,  299,  313 ;  on 
free  coinage  by  United  States  alone, 
437. 

Chaplin,  Henry,  member  English  Gold 
and  Silver  Commission,  344. 

Chase,  Salmon  P.,  on  uniform  coinage, 
19. 

Chevalier,  Michel,  introduces  Ruggles 
to  Parieu,  41;  defends  gold  standard, 
144. 

Chili  adopts  gold  standard,  445. 

Churchill,  Lord  Randolph,  urges  coin- 
age agreement  for  India,  341 ;  Chan- 
cellor of  the  Exchequer,  344. 

Circulation,  in  United  States,  11,  15, 
112,  152,  198,  329,  336,  355,  364,  425 ; 
in  Germany,  127,  256;  in  France,  212, 
336, 340;  in  India,  386,  414 ;  in  Mexico, 
449. 

Cleveland,  President,  letters  to  silver 
congressmen,  336;  urges  suspension 
of  silver  coinage,  340;  effect  of  tariff 


INDEX 


471 


message  of,  350 ;  asks  for  postpone- 
ment of  adjourned  conference,  412; 
calls  Congress  in  special  session,  425: 
policy  of,  426-430,  439-442. 
Coinage,  ancient,  1-6  ;  agreements  for, 
7,  29,  138;  in  the  world,  236,  243,  385; 
in  United  States,  11-17,  60,  66,  122, 
130,  156,  180,  187,  264,  267,  309,  356; 
in  France,  32,  60,  106,  198,  309,  340 ; 
in  England,  60,  268,  309,  369 ;  in  Ger- 
many, 106,  116,  126,  130,  134,256,275, 
309;  in  India,  133;  in  Holland,  139, 
326;  in  Belgium,  252,  335;  in  Russia, 
145,  446;  in'Austria-Hungary,  373;  in 
Japan,  446;  of  billon,  236. 

—  uniform  international,  urged  by  J. 
Q.  Adams,  12 ;   Secretary  Chase  on, 
19;   declarations   for,    in   statistical 
congresses,  20-23  :  discussed  in  Post- 
al Congress,  23  ;  Napoleon's  plan  for, 
25 ;  advocated  in  United  States  Con- 
gress, 37 ;  Sherman's  letter  on,  42 ; 
conference  in  behalf  of,  45 ;  interna- 
tional committee's  plan  for,  46  ;  con- 
sidered in  conference,  51  et  seq.;  Rug- 
gles's  report  on,  92 ;  Sherman  Bill  for, 
93  ;   Kelley's  bill  for,  100  ;  effect  of 
Napoleon's  fall  on,  104  ;  suggests  re- 
vision   of    mint    laws,   109 ;    United 
States  correspondence  on,  113  ;  Prof. 
Boweu's  plan  for,  166;  neglected  in 
German  currency  reform,  116;  stand- 
ing of,  in  conference  of  1878,  203,  221, 
236 ;  suggested  in  conference  of  1892, 
403. 

Coin's  Financial  School,  439. 

Commerce,  ancient,  1 ;  after  the  Cru- 
sades, 3 ;  after  gold  discoveries,  31 ; 
of  Germany  and  United  States,  328 ; 
increase  in  India,  331 ;  increase  in 
Mexico,  398,  449 ;  of  India  and  Eng- 
land, 451. 

Commission,  French  Imperial,  26,  37 ; 
French  Monetary,  88,  105 ;  English 
Uniform  Coinage,  91,  101 ;  Swedish 
Monetary,  103, 114 ;  Dutch  Monetary, 
124,  139;  Belgian  Monetary,  137; 
English  on  Depreciation  of  Silver, 
148  ;  Silver  of  United  States,  161-167 ; 
English  on  Depression  of  Trade,  258, 
341,  342;  English  Gold  and  Silver, 
343,  351 ;  Indian  Currency,  372,  412- 
417 ;  German  Silver,  431 ;  English  on 
Depression  of  Agriculture,  460;  Wol- 
cott  Bimetallic,  459. 

Conference,  Latin  Union  of  1865,  28-30 ; 
of  1874,  138 ;  of  1878,  252 ;  of  1885, 
334  338 

—  of  1867,  planned  by  Napoleon,  35,  39  ; 
invitations  to,  45  ;  delegates  to,  47- 
50  ;  heads  of  inquiry,  54 ;  adopts  sys- 
tem of  Latin  Union,  63 ;  adopts  gold 
standard,  68 ;  chooses  5-franc  piece 
as  unit,  76;   provides   for   25-franc 


piece,  78 ;  means  of  control,  80  ;  pro- 
ceedings reviewed,  83 ;  F.  A.  Walker 
on,  236. 

—  of  1878,  suggested,  141, 160, 183  ;  bill 
for,  186 ;  invitations  to,  203 ;  absence 
of  Germany,  203,  214;  delegates  to, 
204 ;  United  States'  propositions,  209 ; 
France  in,  212 ;  Switzerland  in,  218  ; 
Italy  in,  219 ;  Greece  in,  222 ;  Holland 
in,  222 ;  England  in,  225 ;  Norway  in, 
228 ;  United  States  in,  235-244 ;  Euro- 
pean  response,    244 ;  Italy  dissents, 
246 ;  reply  of  United  States'  delegates, 
247 ;  cause  of  failure,  249,  250. 

—  of  1881,  France  seeks  co-operation 
for,  260;  invitations  to,  269;  opens, 
271 ;  heads  of  inquiry,  272  ;  German 
declaration,  274  ;  Cernuschi's  propo- 
sition, 280;  solicitude  of  England  and 
Germany,  281 ;  Russia's  position,  286; 
Germany's  alleged  loss,  288 ;  United 
States'  position,  292,  300,  311 ;  Eng- 
land and  India,  295,   302-305 ;  ques- 
tion of  adjournment,  302;  an  inter- 
mission, 306;  Levy  plan,  308;  Cernu- 
schi    and    Schraut,    313;     Holland's 
position,  316,    318;  English  induce- 
ments, 317;    French    and    American 
reply,  320;  gold  monometallism  de- 
fended, 280,   284,  297,  299;  bimetal- 
lism defended,  283,  285,  289,  291-297, 
300 ;  character  of,  323. 

—  of  1892,  preliminary  efforts  for,  33$- 
342,  346-350,  370 ;  delegates  to,  376 ; 
United  States'  propositions,  378-381 ; 
the  Rothschild  plan,  384-388;  exam- 
ining committee,  388;  the  Soetbeer 
plan,   393;  the  Levy  plan,  394;  the 
debate,  395-403 ;  other  plans,  403-405; 
adjournment,  406. 

Conkling,  Senator,  significant  inquiry 
of,  156. 

Costa  Rica  adopts  gold  standard,  445. 

Council  bills,  India,  sold  from  1855  to 
1880,  132 ;  increase  of,  133,  149 ;  pro- 
posal for  checking  sale  of,  254 ;  as 
related  to  Rothschild  plan,  387 ;  after 
closing  of  mints,  414 ;  present  rate, 
455. 

Courcelle-Seneuil,  French  bimetallic 
advocate,  140,  144. 

Courtney,  Leonard,  member  of  English 
Gold  and  Silver  Commission,  344 ;  a 
monometallist,  351 ;  member  of  Indi- 
an Currency  Commission,  373 ;  be- 
comes a  bimetallist,  416. 

Crusades,  effect  on  commerce,  3. 

Currie,  Bertram,  member  of  English 
Gold  and  Silver  Commission,  373; 
delegate  in  conference  of  1892,  376, 
396,  406. 

DEBT,  United  States,  proposed  payment 
of,  in  greenbacks,  95-97 ;  increase  of, 


472 


INDEX 


by  demonetization  of  silver,  138,  147, 
228,  448  ;  United  States'  foreign,  357, 
441 ;  India's  foreign,  414,  452-456. 

Decimal  system,  devised  in  France,  9 ; 
adopted  in  United  States,  10;  report 
of  J.  Q.  Adams  on,  12;  discussed  in 
England,  18 ;  in  Congress,  18,  35 ;  in 
statistical  congresses,  21. 

Denmark,  in  conference  of  1867,  49,  80 ; 
joins  Scandinavian  Union,  124;  in 
conference  of  1881,  270,  308-310;  in 
conference  of  1892,  377,  382,  394,  403. 

De  Normandie,  French  delegate  in  con- 
ference of  1881,  271,  291;  vice-presi- 
dent Bimetallic  League,  437. 

Disraeli,  B.,  on  depression  of  trade,  255. 

Double  standard,  rejected  in  Congress, 
16, 120;  opposed  by  Ruggles,  22,  65; 
why  retained  in  Latin  Union,  30; 
likened  to  opium,  64;  rejected  in 
conference  of  1867,  69;  not  recog- 
nized in  United  States,  71;  popular 
in  France,  81,  89 ;  defended  by  Seyd, 
87;  France  ready  to  abandon,  102; 
an  alternating  standard  in  France, 
111 ;  not  understood  in  United  States, 
118 ;  not  desired  by  silver  men,  153- 
155;  restoration  of,  urged  by  Silver 
Commission,  163 ;  Senator  Edmunds 
on,  188;  discussed  in  conference  of 
1878,  215  et  sea.;  Germany  urged  to 
restore,  261.  See  Bimetallism. 

Dumas,  J.  B.,  president  French  Com- 
mission on  Coins,  sends  sample  25- 
franc  piece  to  President  Johnson,  94 ; 
in  conference  of  1881,  271,  314. 

Dunham,  Congressman,  remarks  on 
double  standard  in  1853,  16. 

Economist,  The,  on  the  struggle  for  gold, 
368. 

Edmunds,  Senator  G.  F.,  on  double 
standard,  188 ;  on  Democratic  party, 
345. 

England,  coinage  of,  5  «.,  60,  268,  309, 
369;  adopts  gold  standard,  9;  deci- 
mal system  discussed  in,  18;  move- 
ment in,  for  uniform  coinage,  21,  91, 
101,  102 ;  in  conference  of  1867,  73, 
78 ;  concerned  over  fall  of  silver,  146, 
148,  226,  254,  306,  373,  410,  456 ;  in 
conference  of  1878,  203,  205  ;  conser- 
vatism of,  279, 339, 409 ;  in  conference 
of  1881,  271,  303-305;  trade  depres- 
sion in,  255,  258,  330,  341,  342,  460; 
movement  for  bimetallism  in,  341, 
&51, 362, 434 ;  its  Gold  and  Silver  Com- 
mission, 344,  351 ;  financial  crisis  in, 
359, 367 ;  imports  and  exports  of  gold, 
354 ;  exchange  with  France,  369 ;  in 
conference  of  1892,  376, 382,  384,  384, 
369,  398, 399, 406 ;  foreign  investments 
of,  440 ;  and  India,  372,  412-417,  430, 
451-456.  See  Bank. 


Evarts,  W.  M.,  Secretary  of  State,  re- 
ported in  favor  of  free  silver  coinage, 
175 ;  desires  another  conference,  258 ; 
in  the  conference  of  1881,  271,  300, 
320. 

Everett,  R.  L.,  resolution  of,  in  Com- 
mons for  conference,  434. 

Exchange,  between  England  and  Unit- 
ed States,  12;  Sherman  on  obstruc- 
tion to,  97 ;  between  Germany  and 
France,  289,  358;  rate  of,  358,  360; 
between  England  and  France,  369 ; 
between  England  and  India,  412,  415, 
419,  430,  455. 

Expectancy,  attitude  of,  212,  222,  230, 
249,  324. 

FAKR,  Dr.,  Register-General  of  Great 
Britain,  plan  for  uniform  coinage,  22. 

Farrar,  T.  H.,  member  of  English  Gold 
and  Silver  Commission,  344,  351 ; 
member  Indian  Currency  Commis- 
sion, 373. 

Feer-Herzog,  Charles,  Swiss  delegate  in 
conference  of  1865,  28 ;  in  conference 
of  1867,  48,  62,  64,  75 ;  urges  France 
to  adopt  gold  standard,  105 ;  in  con- 
ference of  1878, 205,  210,  217,  232, 234, 
238. 

Fenton,  R.  E.,  United  States  delegate 
in  conference  of  1878,  204,  211,  243. 

Folger,  C.  J.,  Secretary  of  Treasury, 
urges  repeal  of  Bland-Allison  Act,  325. 

Forssell,  Hans,  Swedish  delegate  in 
conference  of  1881,270,  297;  in  con- 
ference of  1892,  376,  378,  383,  401, 405. 

Fortamps,  Belgian  delegate  in  confer- 
ence of  1865,  29 ;  in  conference  of 
1867,  49,  62,  65. 

Foville,  French  delegate  in  conference 
of  1892,  377,  405. 

France,  coinage,  of,  6,  32,  60,  106,  198, 
309,  340 ;  and  the  metric  system,  9, 12 ; 
Imperial  Commission  of,  26,  37;  loss 
of  silver,  27;  in  conference  of  1865, 
30 ;  silver  coinage  in,  33,  198,  212,  336, 
340  ;  seeks  additions  to  Latin  Union, 
35  ;  in  conference  of  1867,  51,  55,  58, 
77,  80 ;  preliminary  treaty  with  Aus- 
tria, 88 ;  monetary  commission  of, 
88,  102,  105 ;  double  standard  in,  81, 
89, 102,  111 ;  gold  standard  advocated 
in,  88,  97,  145,  263;  stock  of  coin  in 
1870, 106 ;  payment  of  war  indemnity, 
107 ;  position  after  war  with  Prussia, 
138 ;  resumes  specie  payments,  143 ; 
suspends  silver  coinage,  144 ;  in  the 
conference  of  1878,  212-214,  221; 
flooded  with  silver,  258,  267 ;  desires 
another  conference,  260 ;  in  confer- 
ence of  1881,  273,  278,  280,  313,  314, 
320 ;  exchange  with  Germany,  289, 
358;  exchange  with  England,  369; 
adopts  higher  duties,  323 ;  in  Latin 


INDEX 


473 


Union  conference  of  1885,  834;  in 
conference  of  1892,  382,  395,  403  ;  in- 
sists on  her  ratio,  339,  404 ;  imports 
and  exports  of  gold.  354 ;  bimetallic 
sentiment  in,  3<0,  435 ;  co-operates 
with  Wolcott  Commission,  401.  See 
Bank. 

Franco- Prussian  war,  economic  effects 
of,  104-108,  358  n. 

Free-Silver  bills,  160,  167,  ITS,  256,  342, 
441. 

Freemantle,  Sir  Charles,  British  dele- 
gate in  conference  of  1881,  271,  277, 
297,  314,  317 ;  member  of  Gold  and 
Silver  Commission,  344,  351 ;  in  con- 
ference of  1893,  376,  398. 

Germany,  coinage  of,  4,  6, 106,  116, 126, 
130,  134,  256,  275, 309 ;  coinage  agree- 
ments, 7-9 ;  opinion  for  gold  stand- 
ard. 90,  105;  stock  of  coin  in  1870, 
106 ;  empire  formed,  115  ;  gold  coin- 
age ordained,  116;  act  of  1873,  126; 
sales  of  silver,  134,  149,  192,  195,  197, 
288,  313;  decline  invitation  to  con- 
ference of  1878,  203,  214  ;  circulation 
in  127,  256;  responsibility  for  silver's 
fall,  231 ;  financial  condition  in  1878, 
253;  discontinues  sales  of  silver,  256; 
urged  to  adopt  double  standard,  261; 
Bismarck  modifies  monetary  plans, 
265;  in  conference  of  1881,  274,  306, 
813,315;  exchange  with  France,  289, 
358 ;  imposes  protective  tariff,  328 ; 
proposes  tariff  zollverein,  333,  363 ; 
awaits  England's  action,  340,  349 ;  in 
conference  of  1892,  377, 382  ;  imports 
and  exports  of  gold  and  silver,  134, 
195,197,  354  ;  bimetallic  resolution  in 
Reichstag,  431-434.  See  Bank. 

Ghosh,  A.  S.,  Professor  of  Economics 
in  Calcutta  University,  on  taxes  in 
India,  454;  on  rate  of  council  bills, 
455. 

Gibbs,  H.  H.,  British  delegate  in  con- 
ference of  1878,  206,  232,  233;  be- 
comes a  bimetallist,  260,  419 ;  on 
American  initiative,  459. 

Giffen,  [Robert,  on  fall  in  prices,  262, 
263  n. 

Gladstone,  W.  E.,  announces  close  of 
Indian  mints,  418. 

Godley,  Arthur,  member  Indian  Cur- 
rency Commission,  373. 

Gold,  production  of,  31,  123,  330,  464 ; 
use  of,  in  arts,  131 ;  appreciation  of, 
147,  150,  262,  362.  415;  movement  of, 
267,  327, 337,  354, 361,  422 ;  scarcity  of, 
3,  126,  241,  261,  266,  286,  330,  361/368. 

—  coinage,  in  aiicient  times,  2;  in 
England,  5  n.,  60,  268,  309,  369;  in 
United  States  60,  66,  130,  267,  423; 
in  France,  60, 106, 336  ;  in  Germany, 
106,  116,  126,  130 ;  in  Austria,  373 ; 


in   Holland,   139;  in  Russia,  446;  in 
Japan,  446  ;  in  the  world,  130. 

—  reserve  in  United  States,  354,  375, 
425,  428. 

—  standard,   adopted  by  England,  9; 
desired  in  United  States,  16,  112, 153  ; 
urged    for    Latin    Union,    30,    105; 
sought  in  India,  81,  371,  386 ;  accept- 
ed  in  United  States,  35,  93,  112,  120, 
152-156 ;  single  objection  to,  in  con- 
ference   of    1867,  64 ;     adopted    in 
conference,  68 ;    natural   movement 
for,  85,  97 ;  German  opinion  for,  90  ; 
Ruggles's  view  of,  93 ;  "  an  American 
idea,"  98;   adopted  by  French  com- 
mission, 102,.106 ;  adopted  by  Swedish 
commission,  114;  advocated  by  Dutch 
commission,  124,  139 ;   advocates  of, 
in  France,  144;  opposed  in  Belgium, 
137,  140 ;  discussed  in  conference  of 
1878,    215,    225,  228;    doctrine    of, 
weakened,    248 ;    discussed    in   con- 
ference of  1881, 280, 283, 297  ;  adopted 
by  Germany,  126 ;  adopted  by  Aus- 
tria, 373;  adopted  by  Japan,  Russia, 
Chili,  Costa  Rica,  San  Salvador,  445. 

Goschen,  G.  J.,  British  delegate  in 
conference  of  1878, 204,  210,  225,  227, 
232,  245;  on  scarcity  of  gold,  330, 
363  ;  on  effect  of  Bland-Allison  Act, 
339 ;  on  Baring  crisis,  368. 

Graham,  Thomas,  British  delegate  in 
conference  of  1867,  47,  59,  60,  78. 

Greece,  early  coinage,  2  ;  joins  Latin 
Union,  40 ;  in  conference  of  1867,  48, 
80;  in  conference  of  1878,  206,  222; 
in  conference  of  1881,  270 ;  in  con- 
ference of  1892,  377,  3S2. 

Greenback  party,  151,  168, 177. 

Greenbacks,  in  payment  of  national 
debt,  95 ;  and  the  gold  reserve,  426, 
429,  439. 

Groesbeck,  "W.  S.,  member  of  Silver 
Commission,  162;  adheres  to  old 
ratio,  166;  delegate  in  conference  of 
1878,  204,  208,  210,  239. 

HANDELSTAG,  German,  petition  for 
gold  standard,  89. 

Hanseatic  League,  4. 

Harcourt,  Sir  William,  on  Everett  reso- 
lution, 434. 

Hardie,  Robert,  on  protection  and  gold 
standard,  441  n. 

Haupt,  Ottomar,  Austrian  economist, 
on  silver  in  1890,  367. 

Hayes,  President,  reported  in  favor  of 
silver  coinage,  175 :  message  to  Con- 
gress, 180 ;  vetoes  Bland-Allison  Bill, 
189  ;  on  resumption,  263. 

Hengelmiiller,  C.  von,  Austrian  dele- 
gate in  conference  of  1878,  205,  230. 

Herschell,  Lord,  chairman  English 
Gold  and  Silver  Commission,  344, 


474 


INDEX 


351 ;  chairman  Indian  Currency  Com- 
mission, 372. 

Hock,  Baron  de,  Austrian  advocate  of 
uniform  coinage,  45 ;  in  conference 
of  1867,  49,  58,  64,  70,  75,  80. 

Hohenlohe,  Chancellor  von,  on  Mirbach 
resolution,  433. 

Hooper,  Congressman,  on  double  stand- 
ard, 118 ;  letter  from  Seyd,  119 ;  on 
the  silver  dollar,  120. 

Holland,  coinage  of,  139, 326  ;  in  confer- 
ence of  1867,  58,64,  68,  80 ;  suspends 
silver  coinage,  124,  139  ;  movement 
in,  for  bimetallism,  141;  in  conference 
of  1878,  206,  222 ;  in  conference  of 
1881,  270,  283,  291,  295,  316,  318 ;  in 
conference  of  1892,  378,  395,  399, 400. 
See  Bank  of. 

Horton,  S.  Dana,  United  States'  dele- 
gate in  conference  of  1878,  204,  212, 
233,  242  ;  in  conference  of  1881,  271, 
273,  289,  300. 

Houldsworth,  Sir  William,  member 
English  Gold  and  Silver  Commission, 
344  ;  on  bimetallic  petition  to  Com- 
mons, 362 ;  in  conference  of  1892, 
376,  399,  400  404,  407. 

Howe,  T.  O.,  United  States'  delegate  in 
conference  of  1881,  271,  292. 

INDEMNITY,  French  war,  payment  of, 
107. 

India,  seeks  gold  standard,  81,  371,  386; 
coinage,  133  ;  silver  imports,  33,  132, 
232,  421;  gold  imports,  132,  361; 
council  bills,  132,  149,  254,  387,  414, 
455;  difficulties  of  trade  with,  147 ;  de- 
clines to  close  mints,  150 ;  seeks  loans 
in  England,  193,  420;  aid  of,  in  main- 
taining silver,  226  ;  in  conference  of 
1881,  271,  295,302;  increased  com- 
merce of,  331 ;  appeals  for  free-silver 
agreement,  341,  344;  prefers  bimet- 
allism, 372,  390,  417;  in  conference 
of  1892,  377,  386-388,  390,  396,  399 ; 
rupee  vacuum  in,  412 ;  per  capita  cir- 
culation in,  414 ;  mints  closed  to 
silver,  417-419,  420 ;  duty  on  silver, 
430 ;  plight  of,  451 ;  foreign  debt, 
414,  452-456;  taxation  in,  453;  refusal 
to  reopen  mints,  462. 

International  committee  on  uniform 
coinage,  37  ;  report  of,  46. 

Iowa,  campaign  of  1877  in,  169, 178. 

Italy,  in  conference  of  1865,  30 ;  in  con- 
ference of  1867,  49 ;  exports  of  silver, 
145  ;  in  conference  of  1878,  206,  219, 
246 ;  in  conference  of  1881,  270,  285, 
316;  efforts  for  resumption,  330,  344  ; 
in  conference  of  1892,  378,  406. 

JACOBI,   Moritz,  Russian  delegate   in 

conference  of  1867,  48,  67. 
Japan   adopts  gold  standard,  445-447. 


Jefferson,  Thomas,  on  decimal  system, 
10 ;  stops  coinage  of  silver  dollars,  11 . 

Johnson,  President,  receives  sample  25- 
frauc  piece  from  France,  94;  his  strug- 
gle with  Congress,  92,  101. 

Jones,  Senator,  advocates  gold  stand- 
ard, 153 ;  on  failure  to  coin  silver 
dollars,  157;  suggests  bimetallic 
conference,  160 ;  member  of  Silver 
Commission,  162  ;  advocates  ratio  of 
15  to  1,  166 ;  votes  against  conference 
amendment,  187 ;  in  conference  of 
1892,  377,  400. 

KASSON,  J.  A.,  advocates  uniform  coin- 
age, 35,  203. 

Kelley,  W.  D.,  opposes  currency  con- 
traction, 96;  bill  for  uniform  coinage, 
100 ;  management  of  mint  bill,  115, 
118;  opposes  double  standard,  120; 
explanation  of,  157  ;  becomes  a  free- 
silver  man,  160. 

Kern,  Dr.  J.  C.,  Swiss  delegate  in  con- 
ference of  1865,  29;  in  conference  of 
1867,  48,  70,  79;  in  conference  of  1881, 
270,  272. 

Kimberly,  Lord,  on  closing  of  India 
mints,  420. 

Knox,  Comptroller  of  Currency,  report 
on  mint  bill,  109,  110. 

Kuefstein,  Count  von,  Austrian  dele- 
gate in  conference  of  1878,  205,  231, 
245,  246;  in  conference  of  1881,  270, 
278,  290. 

LARDY,  C.  E.,  Swiss  delegate  in  con- 
ference of  1878,  206;  in  conference 
of  1881,  270,  315 ;  in  conference  of 

.  1892,  378,  394. 

Latin  Union,  formed,  26  ;  motives  for, 
26-30;  initial  treaty  of,  29;  rati- 
fied, 32 ;  gold  standard  urged  for, 
30,  105 ;  effect  on  uniform  coinage 
movement,  34 ;  United  States  asked 
to  join,  38 ;  Prussia  declines  to  join, 
40 ;  strength  in  conference  of  1867, 
50;  system  of,  adopted  in  conference, 
63;  joined  by  Spain,  88;  conference 
of  1874, 138;"  Spain  withdraws  from, 
145;  influence  on  price  of  silver,  233; 
conference  of  1878,  252;  conference 
of  1885,  334,  338 ;  position  in  confer- 
ence of  1892,  394. 

Laveleye,  Prof.,  Belgian  economist, 
opposes  gold  standard,  137,  140. 

Leroy-Bealieu,  cited,  107  n. ;  advocate 
of  gold  standard,  144. 

Levi,  Montefiore,  president  conference 
of  1892,  377,  378,  4v5. 

Levy,  Moritz,  Danish  delegate  confer- 
ance  of  1881,  270  ;  his  plan,  308,  394; 
cited,  347  n. 

Lieber,  Dr.,  supports  Mirbach  resolu- 
tion in  Reischstag,  432. 


INDEX 


475 


Lindermann,  Dr.,  Director  of  the  Mint, 
report  for  restoration  of  silver  cur- 
rency, 112. 

Lubbock,  Sir  John,  member  English 
Gold  and  Silver  Commission,  344, 351. 

Luzzatti,  Italian  delegate  in  conference 

.  of  1881,  270,  285. 

McCREAKY,  J.  B.,  United  States'  dele- 
gate in  conference  of  1892,  877,  399. 

McCulloch,  Hugh,  Secretary  of  Treas- 
ury, 39  ;  approves  Paris  plan,  92  ; 
analyzes  Ruggles's  report,  93 ;  urges 
suspension  of  silver  coinage,  329. 

McKinley,  William,  vote  of,  in  1877, 169 
n. ;  candidacy  of,  in  1896, 443 ;  message 
to  Congress,  462. 

Magnin,  J.,  president  conference  of 
1881,  272,  437. 

Mallet,  Sir  Louis,  Indian  delegate  in 
conference  of  1881,  271,  295  ;  member 
of  Gold  and  Silver  Commission, 
344. 

Manning,  Daniel,  Secretary  of  Treasury, 
urges  suspension  of  silver  coinage, 
341,  345,  350. 

Marble,  Manton,  mission  of,  to  Europe, 
338. 

Matthews,  Stanley,  resolution  of,  on 
payment  of  public  debt,  184. 

Mees,  W.  C.,  Dutch  delegate  in  confer- 
ence of  1867,  49,  58,  64, 68 ;  advocates 
international  bimetallism,  103,  140 ; 
advice  of,  to  United  States,  222 ;  let- 
ter to  conference  of  1881,  310. 

Meinecke,  Prussian  delegate  in  confer- 
ence of  1867,  58,  65,  79. 

Metric  system,  devised  in  France,  9 ; 
extension  of,  12,  18,  20,  38. 

Mexico,  in  conference  of  1892,  376,  389, 
395,  397 ;  present  position  of,  449-451. 

Mirbach,  Count  von,  bimetallic  resolu- 
tion of,  in  Reichstag,  431-433. 

Molesworth,  Sir  G.  L.,  British  delegate 
in  conference  of  1892,  377,  390,  399. 

Montagu,  Sir  Samuel,  member  of  Eng- 
lish Gold  and  Silver  Commission,  344. 

Morgan,  Senator  E.  D.,  report  against 
discontinuing  silver  dollar,  99. 

Morrill,  Senator  J.  S.,  favors  a  confer- 
ence, 182. 

NAPOLEON,  Jerome,  president  Imperial 
Commission,  26 ;  in  conference  of 
1867,  73,  77,  79,  81. 

Napoleon  III.,  seeks  to  extend  metric 
system,  18 ;  character  of,  23  ;  plans  of, 
for  uniform  coinage,  24 ;  economic 
campaign  of,  34 ;  confers  with  Rug- 
gles,  44  ;  appoints  Jerome  to  preside, 
72;  fall  of,  103. 

Norway,  in  conference  of  1867,  49,  64, 
80 ;  first  sales  of  silver  in,  103 ;  in  con- 
ference of  1878,  206,  228 ;  in  confer- 


ence of  1881,  270,  2-K) ;  in  conference 
of  1892,  378. 

OHIO,  campaign  of  1877  in,  169, 177. 

PARIEIT,  E.  de,  in  conference  of  1865, 
28 ;  confers  with  Ruggles,  41  ;  in  con- 
ference of  1867,  50-56,  62,  69,  79,  84 ; 
advocates  gold  standard  for  France, 
97,  138,  145,  263 ;  on  the  Bland  Bill, 
199. 

Pennsylvania,  campaign  of  1877  in,  169, 
177. 

Phelps,  E.  J.,  Minister  to  England,  re- 
port on  British  monetary  policy,  339. 

Pierson,  Prof.,  Dutch  delesrate  in  con- 
ference of  1881,  270,  283,  291, 316,  318. 

Pirmez,  E.,  Belgian  delegate  in  confer- 
ence of  1878,  205,  215  ;  in  conference 
of  1881,  270,  284,  299. 

Portugal,  in  conference  of  1867,  49,  57, 
75,  80 ;  in  conference  of  1881,  270,  299. 

Prendergast,  Moret,  Spanish  delegate 
in  conference  of  1881,  270.  281,  290, 
296,302. 

Prices,  of  silver,  27,  32,  135,  233,  366, 
387,  391,  414,  418,  420;  fall  of,  248, 
262,  414,  415. 

Prussia,  declines  to  join  Latin  Union, 
40,  89  ;  in  conference  of  1867,  49,  58, 
64,  79 ;  solidifies  German  states,  103  ; 
finances  of,  253. 

RAFFALOVICH,  A.,  Russian  delegate  in 
conference  of  1892,  378,  388. 

Ratio,  of  silver  to  gold,  in  ancient  times, 
1,  3;  of  16  to  1  established,  14;  as 
effecting  Latin  Union,  27 ;  compared 
with  production,  67 ;  discussed  in  con- 
ference of  1867, 69  ;  from  1870  to  1880, 
132 ;  from  1861  to  1870,  135  ;  adopted 
in  Holland,  139 ;  Silver  Commission's 
report  on,  166 ;  under  Bland-Allison 
Act,  187,  198,  207,  241 ;  France  insists 
on  15^  to  1,  339,  461. 

Reay,  Lord,  Indian  delegate  in  confer- 
ence of  1881,  271,  277,  302. 

Renzis,  Baron  de,  Italian  delegate  in 
conference  of  1881,  378,  406. 

Revenue,  of  the  United  States,  423, 
429, 439 ;  of  India,  453 ;  in  Mexico,  450. 

Rogers,  Prof.  J.  T.,  on  fall  in  prices, 
262. 

Romero,  M.,  Mexican  Minister  to 
United  States,  cited,  450. 

Rothschild,  N.  M.,  &  Sons,  members  of 
refunding  bond  syndicate,  170,  179. 
190. 

Rothschild,  A.  de,  British  delegate  in 
conference  of  1892,  377  ;  plan  of,  384- 
393,  395,  398. 

Roumania,  joins  Latin  Union,  40  ;  seeks 
gold,  360  ;  in  conference  of  1892,  376, 
403. 


476 


INDEX 


Ruggles,  S.  B.,  United  States'  delegate 
in  statistical  congress  of  1863,  21 ; 
objects  to  double  standard,  22 ;  sent 
to  Paris,  38 ;  appointed  to  interna- 
tional committee,  41 ;  Seward's  letter 
concerning,  41  n. ;  writes  to  Sherman, 
42 ;  interview  of,  with  Napoleon,  44 ; 
in  conference  of  1867,  46,  59,  71,  76 ; 
report  of,  92. 

Rupee,  stability  of,  331 ;  monopolized, 
413-416,  430. 

Rusconi,  Count,  Italian  delegate  in 
conference  of  1878,  206,  214,  219,  246 ; 
in  conference  of  1881,  270,  287,  300. 

Russia,  in  conference  of  1867,  49,  58, 
67,  80 ;  suspends  silver  coinage,  145  ; 
finances  of,  193 ;  in  conference  of  1878, 

206,  231  ;  in  conference  of  1881,  270, 
286;  in  conference  of  1892,  378,  388; 
imports  of  gold,  354,  360,  445 ;  gold 
coinage  of,  446. 

SALISBUKY,  Lord,  deplores  closing  of 

Indian  mints,  421. 
San    Salvador    adopts  gold   standard, 

445. 
Say,   Leon,   bimetallic  advocate,   144 ; 

president  of  conference  of  1878,  205, 

207,  211,  232. 

Scandinavian  Union,  114, 124. 

Schraut,  German  delegate  in  confer- 
ence of  1881,  270,  313,  315. 

Seismit-Doda,  Italian  delegate  in  con- 
ference of  1881,  270,  285,  300,  316. 

Seward,  Secretary  VV.  H.,  note  to  Ber- 
themy,  39;  letter  concerning  Ruggles, 
41  n.;  approves  of  Sherman's  letter, 
44 ;  reply  to  Berthemy,  9'J. 

Seyd,  E.,  defends  double  standard,  97 ; 
on  the  French  commission,  105 ;  let- 
ter to  Hooper,  119 ;  accused  by  silver 
men,  158,  365. 

Sherman,  John,  reply  to  Ruggles,  42 ; 
bill  for  uniform  coinage,  93 ;  on  pay- 
ing bonds  in  greenbacks,  96 ;  reports 
his  bill,  97 ;  and  the  mint  bill,  113, 122; 
and  bond  sales,  170  et  seq. ;  on  silver 
dollars,  157,  264,  268. 

Silver,  in  Middle  Ages,  3 ;  price  of,  27, 
32, 135,  233,  366,  387,  391,  414,  418,  420  ; 
demonetization  of,  30,  46,  89,  98,  103, 
116,  124,  138,  140,  145,  147,  152-159, 
228, 237,  448  ;  depreciation  of,  148, 193, 
228, 231,  3(59.  385,  398 ;  first  sales  of,  in 
Norway,  103 ;  India's  service  to,  226 ; 
Indian  imports  of,  132,  232,  421,  430  ; 
needed  for  change,  112,  156;  pur- 
chases of,  124 ;  German  imperial,  126, 
257, 265;  German  sales  of,  134, 149,192, 
256,  288 ;  German  stock  of,  366 ;  pro- 
duction of,  129,  135 ;  use  of,  in  arts, 
131 ;  in  the  world,  243,  385  ;  Austria 
closes  mints  to,  253 ;  in  reserves,  212, 
317, 334  ;  larger  use  of,  308,  370,  et  seq. 


Indian  Mints  closed  to,  417-419  ;  tax 
on,  389,  430;  initiative  of  United 
States  for,  437,  459,  462.  See  Act 
Coinage,  Ratio,  Free-silver  bills, 
Commission. 

—  dollars,  urged  as  unit  by  Jefferson, 
10 ;  coinage  of,  stopped  by  Jefferson, 
11 ;  scarcity  of,  before  1873,  36, 157 ; 
discontinuance   of,   94,   99,  111,  115, 
122;  coinage  of,  161,  180,  327;  sus- 
pension of  coinage  urged,  264,  268, 
324,  329,  340;  circulation  of,  264,  327, 
354. 

—  standard,  early  dissatisfaction  with, 
31 ;  United  States  would  not  agree 
to,  43,   312 ;    Prussia's   attitude   to- 
wards, 59;  rejected  in  conference  of , 
1867,    67;    displaced    by    gold,    85; 
rejection  in   Holland,    124,  139;  re- 
jected in  Germany,  126  ;  in  India,  150, 
254, 295,  331, 341, 414,  452  ;  considered 
unfit,  165,  202;    Austria  advised  to 
adopt,  253 ;  in  Mexico,  398,  449 ;  dis- 
continued in  Japan,  446. 

Soetbeer,  Dr.  A.,  advocates  gold  stand- 
ard, 87,  90 ;  tables  of,  cited,  129 ;  plan 
of,  for  larger  use  of  silver,  393. 

Spain,  takes  treasure  from  America,  6 ; 
in  conference  of  1867,  49,  80 ;  and 
Latin  Union,  88,  145 ;  in  conference 
of  1881,  270,  281,  290,  296,  302  ;  in  con- 
ference of  1892,  377,  395. 

Specie  payments,  resumed  in  France, 
143  ;  bill  for,  in  United  States,  153  ;  as 
effected  by  silver  movement,  170  ct 
seq. ;  facilitated  by  maintaining  silver, 
227,  229,  250  ;  opportunity  for,  in  Aus- 
tria, 253 ;  followed  by  prosperity  in 
United  States,  263;  efforts  for,  in 
Italy,  330,  344. 

Stas,  Belgian  delegate  in  conference  of 
1867,  49,  61. 

Stevens,  Thaddeus,  on  payment  of 
national  debt,  96. 

Stewart,  Senator  W.  M.,  on  gold  stand- 
ard, 153,  154. 

Strachey,  Gen.,  member  of  Indian  Cur- 
rency Commission,  373;  in  confer- 
ence of  1892,  376,  377,  396. 

Sweden,  in  conference  of  1867,  49,  64, 
80;  monetary  commission,  103,  114; 
Scandinavian  Union,  124  ;  in  confer- 
ence of  1881,  270,  297 ;  in  conference 
of  1892,  378,  383,  401. 

Switzerland  opposes  double  standard 
for  Latin  Union,  30,  138  ;  in  confer- 
ence of  1867.  48,  58,  64,  79 ;  in  con- 
ference of  1878,  205,  217,  238;  in 
conference  of  1881,  270,  288;  adopts 
protective  tariff,  333 ;  tires  of  Latin 
Union,  334;  in  conference  of  1892, 378. 

TAKIFF,  protective,  as  affecting  gold 
supply,  259,  347,  423,  440;  adopted 


INDEX 


477 


by  Germany,  328 ;  In  Continental 
states,  338 ;  in  campaign  of  1896, 
442. 

Tax,  on  silver  in  Mexico,  389 ;  in  India, 
430 ;  on  salt,  imports  and  incomes  iu 
India,  453. 

Terrell,  E. II.,  vice-president  of  confer- 
ence of  1892,  378. 

Thielmann,  Baron  von,  German  dele- 

fate  in  conference  of  1881,  134,  2TO, 
T4,  281,  298,  314. 

Thoeuer,  T.  de,  Russian  delegate  In 
conference  of  1878,  20(5,  231 ;  in  con- 
ference of  1881,  270,  386. 

Thurman,  A.  G.,  United  States' delegate 
in  conference  of  1881,  271,  311. 

Tietgen,  C.  F.,  Danish  delegate  in  con- 
ference of  1892,  377,  403. 

Tirard,  French  delegate  in  conference 
of  1892,  377,  382,  400. 

Trade,  balance  of,  294,  328,  357 ;  de- 
pression of,  in  England,  255, 330,421 ; 
commission  on,  in  England,  258,  341, 
342. 

—  dollar,  suggested,  100;  provision  for, 
121;  depreciation  of,  155;  legal-tender 
quality  of,  160. 

UNITED  STATES,  coinage  of,  10-17,  60, 
66, 122, 130, 156, 180, 187, 264,  267,  309, 
356,  423 ;  opposed  to  double  stand- 
ard, 16,  22,  65,  71,  120,  153-155;  gold 
standard  desired  in,  16,  112, 153 ;  gold 
standard  accepted  in,  35,  43,  88,  93, 
120  ;  makes  metric  system  legal,  38 ; 
asked  to  join  Latin  Union,  38;  in  con- 
ference of  1867,  49,  59,  65,  71,  76, 
80 ;  and  Canada,  61,  314 ;  repudiation 
movement  in,  95 ;  act  to  strengthen 
public  credit,  96 ;  Greenback  party 
In,  151,  168,  177;  steps  for  uniform 
coinage,  12,  19,  37,  92,  93,  100,  113; 
discovery  of  demonetization  of  silver 
in,  152-157 ;  free-silver  movement  in, 
begins,  160  ;  Silver  Commission,  161- 
167 ;  campaign  of  1877,  169,  178 ; 
seeks  bimetallic  conferences,  186, 338, 
346,  459 ;  in  conference  of  1878,  204, 
209,  235-244,  247 ;  bond  sales  and  re- 
sumption, 153,  170-190,  263 ;  imports 
and  exports  of  gold,  267,  327,  337, 


354,  422;  in  conference  of  1881,  271, 
2?2, 292, 311 ;  circulation  in,  1 1, 13, 15, 
112,  152,  198,  329,  336,  355,  364,  425 ; 
commerce  with  Germany,  328 ;  im- 
ports and  exports  of  silver,  867 ; 
foreign  debt  of,  357,  441 ;  in  con- 
ference of  1892,  377,  380,  392,  397, 
399,  402,  405,  406;  political  condi- 
tions in,  409 ;  initiative  in  opening 
mints  to  silver,  437,  459,  462  ;  panic  of 
1893,  425 ;  gold  reserve  and  bond 
sales,  354,  375,  425,  428,  440;  silver 
craze  of  1895,  439  ;  elections  in  1896, 
442  ;  Wolcott  Commission,  459.  /See 
Act,  Silver,  Debt. 

VAN  DEN  BERG,  Dutch  delegate  in  con- 
ference of  1892,  377,  399,  400. 

Vest,  Senator,  resolution  of,  forremon- 
etiziug  silver,  258. 

Vrolik,  A.,  Dutch  delegate  in  confer- 
ence of  1867,  49;  position  in  1878, 
222  ;  in  conference  of  1881,  270,  295. 

WALKEU,  F.  A.,  criticism  of  Ruggles, 
41  «.;  United  States'  delegate  in  con- 
ference of  1878,  204,  211,  235,  247. 

Warner,  A.  J.,  silver  bill  of,  256. 

Weber,  Belgian  delegate  in  conference 
of  1892,  377,  400. 

Welby,  Sir  R.  E.,  member  Indian  Cur- 
rency Commission,  373. 

Wheat,  Indian  exports  of,  331 ;  price  of, 
457,  465. 

Willard,  G.,  member  of  United  States' 
Silver  Commission,  162,  164,  166. 

Wilson,  Sir  Rivers,  British  delegate  in 
conference  of  1867,  49,  73,  79 ;  secre- 
tary of  commission  on  uniform  coin- 
age, 101 ;  in  conference  of  1892,  376, 
382,  398,  407. 

Windom,  Secretary,  plan  of,  for  silver 
purchases,  364-3*66,  369. 

Wolcott,  Senator  E.  O.,  anticipates  a 
conference,  438;  negotiations  with 
European  powers,  459. 

Wolowski  advocates  bimetallism,  140, 
144. 

ZOLLVEREIN,  German  coinage,  9 ;  Cen- 
tral European,  338,  463. 


THE  EXD 


SOCIAL  AND  POLITICAL  SCIENCE 


WEALTH  AGAINST  COMMONWEALTH.  By  HENRY 
DEMAREST  LLOYD.  8vo,  Cloth,  $2  50 ;  Popular  Edition, 
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Tiiis  is  the  most  complete  history  in  existence  of  the  great  combina- 
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CONSTITUTIONAL  HISTORY  OF  THE  UNITED 
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CULBERTSON    CLAYTON.       8vO,  Cloth,  $3   00. 

George  Ticknor  Curtis's  "  Constitutional  History  of  the  United 
States"  first  appeared  in  1854,  and  at  once  became  a  standard  authority. 
In  1889  Mr.  Curtis  issued  a  revised  edition  in  one  volume,  and,  in  continu- 
ation of  the  work  originally  published,  a  second  volume  was  announced 
as  in  course  of  preparation — the  period  covered  in  this  projected  second 
volume  being  from  the  adoption  of  the  Constitution  to  the  close  of  the 
Civil  War.  During  twenty  years  this  labor  had  occupied  Mr.  Curtis.  After 
his  death,  in  March,  1894,  a  large  quantity  of  manuscript  relating  to  the 
proposed  second  volume  was  found  among  his  papers,  and  this  material 
was  placed  in  the  hands  of  Mr.  Joseph  Culbertson  Clayton,  by  whom  the  vol- 
ume has  been  prepared  for  publication.  Its  appendix  contains  detached 
writings  of  Mr.  Curtis  cognate  to  the  main  work ;  also  historical  docu- 
ments, an  annotated  copy  of  the  Constitution,  and  notes  by  the  editor. 


NEW  YORK   AND   LONDON 

HARPER   &   BROTHERS,    PUBLISHERS 


Date  Uue 


Library  Bureau  Cat.  No.  1137 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 

AA      000059519  9 


